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Characteristics of Money

Legal tender ...

Question

Legal tender money is the currency notes issued by the

A

Central Bank

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B

Cooperative bank

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C

Commercial bank

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D

None of the above

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Solution

The correct option is A
Central Bank

Legal tender money is the currency notes issued by the Central Bank of definite denominations and value. When general acceptability of any medium of exchange is enforced by law, that medium of exchange is called the legal tender money.

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Similar questions

Q. Fill in the blanks with appropriate alternatives given in the brackets:
The currency notes issued by Central Bank are ___ legal tender.
(Limited, unlimited, restricted, nil)

Q. Currency is issued by the central bank, yet we say that commercial banks create money. Explain. How is this money creation by commercial banks likely to affect the national income? Explain.

"Although Central Bank issues currency we say commercial banks create money." Explain how.

Q. Why do we say that commercial banks create money while we also say that the central bank has the sole right to issue currency ? Explain. What is the likely impact of money creation by the commercial banks on national income ?

Q. Fill in the blanks with appropriate alternatives given in the brackets.

1. Central bank has the __________ of note issue. (monopsony/monopoly/duopoly/oligopoly)
2. The central bank acts as a ____________ of cash reserves of the country. (head/ leader/ custodian/ locker)
3. Bank Rate is also called as __________ rate. (rediscount/ market/ general/ exchange)
4. ____________ is the apex body of the monetary and banking systems of the nation's economy. (Commercial bank/ Central bank/ Government/ Co-operative bank)
5. Reserve Bank of India was established in _____________. (1937/ 1939/ 1935/ 1934)

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