economics medium True/False

Fiat money possesses high intrinsic value because it is fully backed by gold reserves held by the central bank.

  1. True
  2. False

Answer: False

Fiat money, such as modern paper currency, has zero intrinsic value and is not backed by any physical commodity like gold or silver. Its value derives entirely from government decree (fiat) and the public's trust that it will be accepted as a medium of exchange for goods and taxes.

Topic Macroeconomics - Money
Exam Relevance Banking, SSC, UPSC
More economics Questions Back to all questions