Economy
2018
Banking in India
Basic Economic Terms
Which one of the following statements correctly describes the meaning of legal tender money?
D.The metallic money in circulation in a country
A.The money which is tendered in courts of law to defray the fee of legal cases
B.The money which a creditor is under compulsion to accept in settlement of his claims
C.The bank money in the form of cheques, drafts, bills of exchange, etc.
Correct Answer: Option B
Legal tender refers to any official medium of payment recognized by law that can be used to settle a public or private debt, or meet a financial obligation.
In virtually every country, the national currency serves as legal tender.
A creditor is legally bound to accept legal tender when offered as repayment for a debt.
Cheques are not legal tender because a party can refuse them as a mode of payment.
Hence, option B is the correct definition of legal tender.
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