Question : Assertion (A): Currency money is also termed as Fiat money.
Reason(R): Under law, currency must be accepted for payment for all debts.
Option 1: Both Assertion (A) and Reason(R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason(R) are true, but Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true, but Reason (R) is false.
Option 4: Assertion (A) Is false, but Reason (R) is true.
Correct Answer: Both Assertion (A) and Reason(R) are true and Reason (R) is the correct explanation of Assertion (A)
Solution : The correct answer is (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Assertion is termed as Fiat money, which is true. Fiat money refers to money that has value because the government declares it to be legal tender, not because it is backed by a physical commodity like gold or silver.
Reason is also true, as legal tender laws require creditors to accept currency as a form of payment.
Therefore, both Assertion (A) and Reason (R) are true, and Reason (R) correctly explains Assertion (A).
Answer laterQuestion : Which of the following is not an example of fiat money in India?
Option 1: INR 500 currency note
Option 2: INR 200 bank cheque
Option 3: INR 20 coin
Option 4: INR 10 coin
Correct Answer: INR 200 bank cheque
Solution : The correct answer is an INR 200 bank cheque.
The government's money, known as fiat money, is not supported by tangible goods like gold or silver. Examples of fiat money are paper currency, coins, and demand drafts, but the INR 200 bank cheque doesn't fall under the category of fiat money.
