What is a Legal Tender Money Example?
By BYJU'S Exam Prep
Updated on: November 9th, 2023
A Legal Tender Money example simply refers to a currency that must be accepted when provided as payment for debts. The money obtained by law in a specific political jurisdiction is known as Legal Tender. Legal laws practically forbid using any other form of payment as currency in the economy. Every banknote issued by the Reserve Bank of India (₹2, ₹5, ₹10, ₹20, ₹50, ₹100, ₹200, ₹500, and ₹2000), is guaranteed by the Central Government and is a legal tender in any location in India for the amount stated on it unless it is withdrawn from circulation.
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Example of Legal Tender Money
A legal tender money example is the currency that is authorized by law to be accepted as payment for goods and services. Therefore, the national currency, including coins and paper money officially recognized by law as acceptable as payment for debts and other financial obligations, is called legal tender money.
- In addition to the economic use of money, legal tender also facilitates the implementation of monetary policy and currency manipulation.
- An act designates a specific item as legal tender, and the organization with authority to make and distribute it to the general public, such as the U.S.
- The Treasury in the United States or the Royal Canadian Mint in Canada establishes legal tender.
- The Federal Reserve coins and notes are accepted as legal money in the United States.
- Creditors are compelled to accept them as payment offered to discharge a debt.
Summary:
What is a Legal Tender Money Example?
Legal tender Money is the money required to be accepted as payment for debts. Unless otherwise forbidden by state law, private businesses may decline to accept some or all types of cash currency as long as no transaction has taken place and the consumer has yet incurred no debt. Lastly, a Legal Tender Money Example would be the currency issued by a country’s central bank.
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