Q. Consider the following statements regarding currency coins and notes in India:

1. They are backed by an equivalent value of gold kept in the Reserve Bank of India (RBI).
2. They come under a type of fiat money.
3. They have equivalent intrinsic value of their denomination.
4. They are counted in both narrow money and broad money figures.

Which of the above statements is / are correct?
Answer: Only 2 and 4
Notes: Indian currency is not backed by gold, but is classified as fiat money. The coins and notes do not have intrinsic value equal to their denomination; their value is by official decree. Currency in circulation is included in both narrow money (M1) and broad money (M3) figures, making only statements 2 and 4 correct.