166k views
5 votes
Which type of money is based only on faith?

commodity money
fiat money
representative money
foreign money

User Pjhsea
by
6.9k points

2 Answers

3 votes
I believe fiat money is the correct answer here.

User TechnicalViking
by
6.9k points
3 votes

Answer: Fiat money

Step-by-step explanation:

Fiat money refers to money that the government has ordered to accept as a means of payment for any kind of exchanges in the economy. This money has value only because the government has ordered so. If people have no faith in the government then they will have no value for fiat money.

While, commodity money refers to money whose value comes from the commodity with which it is made. They have their own intrinsic value.

Representative money is money that has no intrinsic value but represent something of value such as silver or gold certificates.

Foreign money is also foreign currency which is used to exchange. This is just fiat money of another country.

User Ondrej Vencovsky
by
5.9k points