Fiat money

High school (ages 12+)
People & Society

Name:

Date:

Step 1 · Read the article

Open the article and read it at the level above. Then answer the questions below in your own words.

https://smallwhale.org/articles/fiat-money

Write what each word means, using the article.

Do not copy the article. Write two things you learned, the way you would explain them to a friend.

Answers below are taken from the article’s stored facts, so they match what the student read.

1. What is the monetary system type?Government-issued currency authorized by regulation, not backed by a physical commodity
2. Why did countries stop using gold for money?In 1971 the United States stopped letting people exchange dollars for gold, ending the old system that linked money to gold. This change helped create the modern world of fiat money.
3. How does a government make fiat money valuable?A government says the money must be accepted for debts and people believe the country is stable. Because of this promise, people use it to trade and pay for things.

Legal Tender: A medium of payment recognized by law that must be accepted for settling debts.
Commodity Money: Money whose value comes from the commodity out of which it is made (e.g., gold coins).
Representative Money: Money that represents a claim on a commodity, such as gold or silver, held elsewhere.
Inflation: A general increase in prices and fall in the purchasing value of money.