Currency notes and coins are called:

The correct option is Fiat Money.

Let's understand why currency notes and coins are classified as fiat money by breaking down the key concepts step-by-step:

1. Understanding Fiat Money:
Fiat money is a type of currency that is established as money by government regulation or law (a government decree or "fiat"). It does not have intrinsic value (unlike gold or silver coins) and is not backed by a physical commodity. Instead, its value comes from the public's trust in the issuing authority (usually a country's central bank and government) and its legal status as tender for paying debts.
Since modern currency notes (paper bills) and coins are issued by governments or central banks and do not possess intrinsic value equal to their face value, they represent the classic definition of fiat money.

2. Why the other options are not the primary classification here:
• Broad Money: This is a category of the money supply that includes physical currency (notes and coins) but also less liquid assets like bank deposits, savings accounts, and other money-market certificates. While notes and coins are a component of broad money, they are not called broad money on their own.
• Currency Base (Monetary Base): This refers to the total amount of a currency that is either in the hands of the public or in the commercial bank deposits in the central bank's reserves. It is a macroeconomic measure rather than the term for the physical instruments themselves.
• Narrow Money: This is a category of the money supply (often denoted as M1) that includes physical currency and demand deposits (easily accessible money). Like broad money, physical currency is only one part of the narrow money definition, and the term itself refers to the monetary aggregate rather than the physical notes and coins directly.