In Contrast to Digital Forms of Money, a Fiat Currency

question 26

Multiple Choice

In contrast to digital forms of money, a fiat currency:

• A) is backed by a physical commodity.
• B) is declared to be legal tender by a nation's government.
• C) represents the value of a government's store of gold.
• D) can be traded for a precious metal.

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Definitions:

Exchange Rate

The amount one currency is worth when exchanged for another.

Foreign Assets

International investments or possessions held by a country, corporation, or individual.

Current Account Deficit

A situation where a country's total imports of goods, services, and transfers is greater than its total exports, indicating that it is spending more on foreign trade than it is earning.

British Pounds

The official currency of the United Kingdom, which is also known as Sterling.