ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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.

Detailed explanation-2: -Fiat money is a type of currency that is not backed by a commodity, such as gold or silver. It is typically designated by the issuing government to be legal tender.

Detailed explanation-3: -Fiat money is currency that has the government backing and is declared by it to be legal tender. It is not backed by a physical commodity and thus doesn’t have any intrinsic value.

Detailed explanation-4: -In fiat money, also known as inconvertible paper money, ‘Fiat’ means government order or command of the sovereign. However, it is no longer a legal tender because, legally, the government banned it from transactions.