Which of the following is most likely to cause a change in the value of fiat money?

• A. An increase in the intrinsic value of the paper used to print money
• B. A change in the public's confidence in the issuing government
• C. A decrease in the physical durability of coins
• D. A rise in the amount of gold backing the currency

Answer: (B)

Verified step by step guidance

1. Understand that fiat money has no intrinsic value; its value comes primarily from the public's trust and confidence in the issuing government.
2. Recognize that changes in the physical characteristics of money, such as the intrinsic value of the paper or the durability of coins, do not directly affect the value of fiat money because its worth is not based on the material itself.
3. Note that the amount of gold backing the currency is irrelevant for fiat money since it is not backed by a physical commodity like gold; fiat money's value is not tied to gold reserves.
4. Identify that a change in the public's confidence in the issuing government can affect the perceived value of fiat money, as trust influences demand and acceptance of the currency.
5. Conclude that among the options, the factor most likely to cause a change in the value of fiat money is a change in the public's confidence in the issuing government.