Advantages: The Arguments And Justifications For Fiat Money. Fiat money is also very flexible and can be used in the payment of a variety of amounts, large and small. Q. a. Fiat money is tied to a fixed quantity of gold and therefore protects against inflation. d.The U.S. dollar is fiat money. Remember that this type of currency is a government-backed legal tender. SURVEY . The principal between fiat money and commodity money is that fiat money is a foreign exchange that is declared by the state or authorities as a approved tender or means for monetary transactions whereas commodity money is a money whose price is said the commodity or gadgets of which it is made like gold, silver, treasured stones, and so forth. Fiat money, in a broad sense, all kinds of money that are made legal tender by a government decree or fiat. b. fiat money with no intrinsic value. b.Fiat money eliminates the need for monetary policy and the Federal Reserve?s role in managing the money supply. The Buzzle write-up below explains the differences between the two. In the Tang Dynasty (618-907), there was a high demand for metallic currency that exceeded the supply of precious metals. A primary advantage of fiat money is that it gives the government control over the economy through its central bank. The term is, however, usually reserved for legal-tender paper money or coins that have face values far exceeding their commodity values and are not redeemable in gold or silver . c.All fiat money is a type of soft currency that trades only within the issuing country. Fiat Money vs Commodity Money The monetary system has always been central to the economy of any country. The people were familiar with the use of credit notes, and they readily accepted pieces of paper or paper drafts. Report question . Correct label: fiat money type of money used in most modern economies Correct label: fiat money. If a country’s required reserve ratio is 8%, when the central bank puts $1,000 of new currency into circulation, by how much can the money supply grow assuming all currency is deposited in a bank and no banks hold excess reserves? Both fiat money and commodity money can be used to make payments, but of the two, fiat money is much more popular and widely used in … Fiat money has value because it is a precious metal such as gold. Tags: Question 3 . The fiat money vs. gold standard debate has been doing the rounds for quite a while. “The undermining of fiat money has been going on for over 40 years, and this has led to a lower standard of living, undermined social trust, and given far more power to the government. Fiat money is a currency (a medium of exchange) established as money, often by government regulation, that does not have intrinsic value.Fiat money does not have use value (inherent utility, such as a cow or beaver pelt might have), and has value only because a government maintains its value, or because parties engaging in exchange agree on its value. Answer to Currently, U.S. currency is a. fiat money with intrinsic value. 30 seconds . It consists of a set of mechanisms used by governments to provide money to the consumers and to control the exchange of money and its supply, especially by adjusting the rates of interest in the market.. Fiat money originated from China in the 10 th century, mainly in the Yuan, Tang, Song, and Ming dynasties. Fiat vs. Representative Money: An Overview . Fiat money has value because it enables the barter system to work. 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