Fiat Money: Understanding Legal Tender
Fiat money refers to currency, like notes and coins, that a government has declared as legal tender, but it is not backed by a physical commodity (like gold).
Legal tender is any form of money that is legally recognized and must be accepted for the payment of debts within a jurisdiction.
- Currency notes and coins issued by a government are declared by law to be acceptable for settling financial obligations.
- Therefore, because they are officially recognized and must be accepted for payments, currency notes and coins (fiat money) are also called legal tender.
This term distinguishes official money from other forms of payment that might be accepted voluntarily but are not legally required.
Important Questions from Money and Banking
Dr. Urjit Patel, who has been appointed recently as Governor of Reserve Bank of India, was holding which position immediately prior to this appointment?
As per the RBI guidelines, which one of the following is the minimum tenure of Masala Bonds that an Indian company can issue offshore?
______ is a tax system that collects a greater share of income from those with high incomes than from those with lower incomes.
In which year had India's ratio of public debt to GDP gone up to a record 84.2%?
______ is an economic scenario where a peculiar combination of low growth and rising inflation leads to high unemployment.
