ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Legal tender means banknotes and coins which are offered in payment of debts and which must be accepted. You can read about the RBI – Know More About Reserve Bank of India in the given link.

Detailed explanation-2: -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.

Detailed explanation-3: -Legal tender refers to any currency that is declared as legal by the government while fiat money is referred to as money that is not backed up by any physical commodities such as gold. They are backed by the government. Fiat currencies provide more control to the central banks over the economy.

Detailed explanation-4: -"SEC. 3588. United States notes shall be lawful money, and a legal tender in payment of all debts, public and private, within the United States, except for duties on imports and interest on the public debt."