Inflation
A gradual rise in prices that reduces how much each unit of money can buy over time.
Fiat
Definition
Fiat money has value because a government declares it legal tender. Unlike gold-backed currencies, fiat currencies can be printed in unlimited quantities, which is why they tend to lose purchasing power over time through inflation.
Example
The US dollar, euro, and Japanese yen are all fiat currencies — their value comes from government decree, not from gold reserves.