Explanation:

Fiat money is the correct answer. Fiat money refers to the currency that is issued by the authority of the government and is not backed by a physical commodity such as gold or silver. It holds value because the government declares it to be legal tender, meaning it is accepted as a form of payment within the country.

Characteristics of Fiat Money:
Fiat money has several key characteristics that distinguish it from other forms of money:

1. Legal Tender: Fiat money is declared by the government to be legal tender, which means it must be accepted as a form of payment for goods and services within the country.

2. No Intrinsic Value: Unlike commodity money such as gold or silver, fiat money does not have any intrinsic value. Its value is derived solely from the trust and confidence placed in the government that issues it.

3. Controlled Supply: The supply of fiat money is controlled by the government or central bank. They have the authority to increase or decrease the money supply through various monetary policy tools.

4. Exchangeability: Fiat money is easily exchangeable for goods and services. It is widely accepted and recognized as a medium of exchange.

5. Legal Backing: Fiat money is backed by the legal authority of the government. The government has the power to enforce the use of fiat money and regulate its circulation.

6. Subject to Inflation: Fiat money is susceptible to inflation, as the government can increase the money supply, leading to a decrease in its value over time.

Examples of Fiat Money:
Examples of fiat money include the US Dollar, Euro, British Pound, Japanese Yen, and many other currencies that are used around the world today.

Conclusion:
Fiat money is the type of money that is issued by the authority of the government. It is not backed by a physical commodity and derives its value from the trust and confidence placed in the government. Fiat money is widely accepted as a form of payment and is the most common form of money used in modern economies.