SSC Economics Sample Paper NCERT Sample Paper-7

  • question_answer
    Which among the following is a correct definition of Fiduciary Issue of notes?

    A)  The issue of currency notes without metallic backing.

    B)  The issue of currency notes with metallic backing.

    C)  The issue of currency notes with partial metallic backing.

    D)  The issue of currency notes with proportional metallic backing.

    Correct Answer: C

    Solution :

    [c] FIDUCIARY ISSUE. This term refers to that portion of a note issue, whether that of a Government or of a bank, which is not protected by a specific backing of metal or coin or assets capable of being converted into coin or bullion on demand. Thus, where no metallic reserve or other assets capable of automatic conversion into metal is kept, the whole issue is of a fiduciary character. The term does not imply that there are no assets of any kind maintained against the note, but only that such assets as are kept are of anon-metallic character-commercial bills of exchange, Government securities or floating debt due by Government.

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