Fiat Money Homework Assignment

What is fiat money backed by?

• A) A physical commodity like gold or silver

• B) The government that issued it

• C) A national stockpile of reserves

• D) The utility of the currency in the market

Which of the following is a characteristic of fiat money?

• A) It can be redeemed for a physical commodity

• B) It is linked to physical reserves

• C) It gives central banks control over the economy because they can control how much is printed

• D) It has intrinsic utility

What is a potential danger of fiat money?

• A) It is too difficult to print

• B) It is always backed by a commodity

• C) Governments can print too much of it, leading to hyperinflation

• D) It cannot be used in international trade

What does the Latin term "fiat" in fiat money translate to?

• A) Gold standard

• B) Let it be done

• C) Physical backing

• D) Government decree

Why might fiat money become worthless in the event of hyperinflation?

• A) Because it is always backed by a physical commodity

• B) Because it is linked to a country's economic performance

• C) Because it is not linked to physical reserves

• D) Because it can be easily counterfeited

What is fiat money?

• Money backed by a physical commodity like gold or silver

• Currency that has value only because the government maintains its value

• A type of cryptocurrency

• An outdated form of currency no longer used

Which act ended the exchange of U.S. currency for gold?

• The Gold Reserve Act

• The Emergency Banking Act of 1933

• The Federal Reserve Act

• The Bretton Woods Agreement

As of the information provided, U.S. dollars are now considered what?

• Lawful money

• Legal tender

• Redeemable in gold

• Backed by the gold standard

What is one of the advantages of fiat money?

• It has intrinsic value

• It is backed by physical commodities

• It gives central banks greater control over the economy

• It is redeemable in gold at any time

What is a disadvantage of fiat money?

• It is difficult for governments to produce

• It provides governments with flexibility

• It can lead to hyperinflation if not managed properly

• It gives central banks less control over the economy