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Characteristics of Money

What is 'lega...

Question

What is 'legal tender'? What is 'fiat money'?

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Solution

Legal Tender: Legal tender refers to the money which can be legally used to make payments of debts or other obligations.

Fiat money: Fiat money refers to the money which is backed with the order of the government under law. It must be accepted for all debts.

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Q. What is a 'legal tender'? What is 'fiat money?

What is a ‘legal tender’? What is ‘fiat money’?

Q. With reference to Fiat Money, consider the following statements:
1) It is the money declared by a government to be legal tender.
2) It is the money without intrinsic value.
3) It is the state issued money which is neither legally convertible to any other thing, nor fixed in value terms of any objective standard.
Which of the statements given above is/are correct?

Q. Distinguish between Legal Tender Money and Credit Money or Bank Money.

Q. Currencies and coins are legal tender money.

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