Question : Which of the following statements is/are true about currency notes?
i. They do not have intrinsic value.
ii. They can be called fiat money.
iii. They are not legal tenders.
Option 1: Only ii
Option 2: Only i
Option 3: Only i and ii
Option 4: Only ii and iii
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Correct Answer: Only i and ii
Solution : The correct answers are Only i and ii.
Currency notes, being fiat money, derive their value not from inherent worth but from the trust people place in the currency and the authority issuing it. Currency notes, such as fiat money, do not have intrinsic value.
Fiat money is a currency that the government has declared as legal tender, but it is not backed by a physical commodity (like gold or silver). Currency notes are examples of fiat money.
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