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Consider the following statements .
(1) Fiat money is a term used for Gold coins
(2) Currency Deposits Ratio is the proportion of the total deposits commercial banks keep as reserves.
Which of the above statements is/are correct?
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- l only
- 2 only
- Both l and 2
- Neither l nor 2
Correct Option: D
Currency notes and coins are called fiat money. They don't have intrinsic value like a gold or silver coin. The currency-deposit ratio measures the relationship between the cash people have on hand and what they have in their accounts.
