Fiat money is moneyGroup of answer choicesbacked by gold or silver.that can be converted to gold or silver.because a government says it is.backed by land.

Understanding Fiat Money

Fiat money refers to currency that a government has declared to be legal tender, meaning that it must be accepted if offered in payment of a debt. Unlike commodity money, which is backed by a physical asset such as gold or silver, fiat money has no intrinsic value and is not backed by any physical commodity. Its value derives largely from the trust and faith that individuals and businesses have in the stability of the government that issues the currency.

Detailed Analysis of the Options:

1. Backed by gold or silver:

   • This option describes commodity money, not fiat money. Commodity money has intrinsic value because it is made of or tied to a physical good.

2. That can be converted to gold or silver:

   • This describes a gold standard or a silver standard, which again is not applicable to fiat money.

3. Because a government says it is:

   • This correctly describes fiat money. Its value is essentially based on the trust in the government that issues it and is not tied to any physical commodity.

4. Backed by land:

   • This would suggest a form of backing by real estate or property, which is not a characteristic of fiat currency.

Conclusion

The correct answer is "because a government says it is." Fiat money relies on government decree, with no physical commodity backing it. It functions effectively because people have faith in the issuing government and its economy.