Question

Currency notes and coins are called:

• A. Fiat Money
• B. Broad Money
• C. Currency Base
• D. Narrow Money

Hint:

Notes and coins = Fiat Money. Broad money and narrow money are aggregates; currency base is high-powered money.

Answer 1

The Correct Option is A

Step 1: Define Fiat Money.
Fiat money is currency issued by the government or central bank which has no intrinsic value but is accepted as money because of legal backing. Notes and coins are fiat money.
Step 2: Distinguish from other terms.
- Broad Money: Includes currency + demand deposits + time deposits + other liquid assets.
- Currency Base: Refers to high-powered money (currency in circulation + reserves with banks).
- Narrow Money: Refers to M1 = currency in circulation + demand deposits. Not limited to just coins/notes.
Step 3: Apply to the question.
Since the question explicitly refers to notes and coins, these are Fiat Money.
Final Answer: \[ \boxed{\text{Fiat Money}} \]