Final answer:
Money is tested for authenticity by examining its physical and security features, such as those found in polymer currencies with diffraction gratings and thin film interference. Criminals attempt to fake these features, but often fail to replicate the more complex elements. The authority of fiat currency as legal tender underpins these security measures, ensuring its globally accepted value.
Step-by-step explanation:
To test whether money is printed on the correct type of paper, one can examine its physical and security features. Currency like the Australian dollar is printed on polymer, a material more durable and secure than traditional paper. Currency also integrates sophisticated security measures such as a diffraction grating and thin film interference effects that produce unique visual effects challenging to replicate. Criminals have attempted to fake these currencies using advanced color printing and materials that mimic the feel of genuine currency paper, but they typically cannot replicate the complex security features.
In the past, the global economy transitioned from commodity-backed money to fiat currency, which is not backed by physical commodities but rather by the government's declaration of legal tender. The statement on United States currency, "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE," illustrates this concept. The security features, trust, and legal backing of fiat currencies like the U.S. dollar enable it to serve as a medium of exchange, store of value, and unit of account while deterring counterfeiting attempts.