Answer to Question #51396 in Macroeconomics for Yoyo

Question

Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate.
Because it is no longer backed by the potential for conversion to gold, modern Canadian fiat currency is no longer able to serve as a form of money.

Answer 1

False. Canadian fiat currency differs from commodity and representative money.
Commodity money is based on a good, often a precious metalsuch as gold or silver, which has uses other than as a medium of exchange
Representative money is a claim on the commodity rather than the actual good. Fiat money derives its value from government regulation or law.