ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Legal tender is something which is acknowledged by the laws as a mechanism to settle a private or public debt or in order to meet a fiscal responsibility which includes paying taxes, abiding by contracts, and finally damages or fines. Almost every country uses its national currency as legal tender.

Detailed explanation-2: -Section 31 U.S.C. 5103, entitled “Legal tender, ” states: “United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks] are legal tender for all debts, public charges, taxes, and dues."

Detailed explanation-3: -Banknotes and coins are two types of legal tender money in India. Every banknote issued by Reserve Bank of India (₹2, ₹5, ₹10, ₹20, ₹50, ₹100, ₹200, ₹500 and ₹2000), unless withdrawn from circulation, shall be legal tender at any place in India.

Detailed explanation-4: -Bills of exchange, bank drafts, postal orders, and cheques are examples of non-legal tender money. These types of money are usually accepted but legally there is no obligation to accept them.

Detailed explanation-5: -for e.g. In India, one paise coin to 25 paise coin is legal tender up to Rs 25. One can refuse payments in these small coins beyond the sum of Rs 25. 2:Unlimited legal tender money is the money that a person has to accept without any limit of amount.