Question
Download Solution PDF________ is the money which is accepted as a medium of exchange because of the trust between the payer and the payee.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is Fiduciary Money.
Key Points
- Fiduciary money is money that is accepted as a medium of exchange due to the trust that exists between the payer and the payee.
- Cheques are fiduciary money as these are accepted as a means of payment on the basis of trust but not on the basis of any order of the government.
- Fiduciary money, or currency, refers to banknotes and coins in circulation in the economy.
- This is the liquidity available to economic sectors to carry out transactions.
Additional Information
- Credit money is the creation of monetary value through the establishment of future claims, obligations, or debts.
- Fiat money is a type of currency that is not backed by any commodity such as gold or silver. It is typically declared by a decree from the government to be legal tender.
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Full-bodied money has a face value not in excess of its intrinsic value as a commodity.
Last updated on May 28, 2025
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