I was looking to get the full form of the term Fiat. But there wasn’t any apt definition of the term Fiat. This question is given in Chapter 7 of NCERT solutions for economics class 12.
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I was looking to get the full form of the term Fiat. But there wasn’t any apt definition of the term Fiat. This question is given in Chapter 7 of NCERT solutions for economics class 12.
Legal Tender or Fiat Money is any money backed by the order of the government (Fiat) to act as money. People have to accept it in exchange for goods and services and in discharge of debt as the government has ordered it to be money. It circulates in the country on order of the government.
Fiat money is generally created and issued by the government at the time of crisses like war or emergency.
It is not backed by gold so this type of money cannot be convert into anything else. Fiat money and fiduciary money are two different things.