Option B: Declared as legal tender by the government. Fiat money derives its value from government regulation and is legal tender by law.

Option A: Backed by precious metals

Option C: Exchangeable for gold

Option D: Self‑issued by banks

Fiat money is - Money and Types of Money (General Studies) Solved Question

Solved UPSC CDS/OTA Question

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Q · Money and Types of Moneymoderate · 45s

Fiat money is:

TopicMoney and Types of Money

Question Typemultiple choice

Difficultymoderate

Marking+1 / −0.33

Test Duration30 min

Step-by-Step Solution

Every step explained - no skipped algebra.

Fiat money derives its value from government regulation and is legal tender by law.

Final Answer: Option B - Declared as legal tender by the government