By which government of the country makes money acceptable as a medium of exchange
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The government issues an order or fiat to make money acceptable as a medium of exchange.
It declares fiat money to be legal tender. All the people and firms within the country are required to accept it as a means of payment. If they do not do so they can be fined. Fiat money is not backed by any physical commodity. Its value is derived from the relationship between supply and demand. Most of the modern economies use the fiat money system. Coins and bills are examples of fiat money. The government prints and mints money which is used as a medium of exchange.
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