Final answer:
U.S. paper money includes security features like a thin film interference effect to protect against counterfeiting, making the statement true. Historically, U.S. currency used to be commodity-backed, but now operates as fiat money, which is legal tender by government declaration.
Step-by-step explanation:
It is true that U.S. paper money has special security features embedded in it as a guard against counterfeiting. One such feature includes a thin film interference effect, which is difficult for counterfeiters to replicate. Other features over the years have included watermarks, color-shifting ink, and security threads. The presence of these security measures makes U.S. currency difficult to forge and protects the integrity of the monetary system.
Historically, U.S. currency like the silver certificates was backed by commodities such as silver. However, today's fiat currency, including the U.S. dollar, is backed not by a physical commodity but by the government's declaration that it is legal tender for all debts, public and private. This move to fiat money reflects a global shift as economies expanded and the use of commodity money became impractical.