Asked by Anthony Rabbit on Apr 28, 2024
Verified
In the context of money, identify a true statement about fiat currencies.
A) The value of fiat currencies remains constant.
B) Bitcoin is an example of a fiat currency.
C) They are digital currencies that are monitored by distributed peer networks.
D) A country can undermine the value of its fiat currency, rendering it valueless.
Fiat Currencies
Money that a government has declared to be legal tender, though it is not backed by a physical commodity.
Digital Currencies
Electronic money that exists in a digital form, enabling instant transactions and borderless transfer-of-ownership.
Valueless
Lacking in value, importance, or utility; having no worth or significance.
- Evaluate the disparities between cryptocurrencies and fiat currencies.
Verified Answer
HB
Hunter BarnettMay 02, 2024
Final Answer :
D
Explanation :
Fiat currencies are backed by the government's declaration rather than a physical commodity or asset. Their value is not intrinsic but is derived from the trust and confidence in the issuing government. Therefore, if a country's economic policies or stability is questioned, it can lead to a loss of confidence in its currency, potentially rendering it valueless. This has happened in various instances of hyperinflation or economic collapse.
Learning Objectives
- Evaluate the disparities between cryptocurrencies and fiat currencies.