UPSC Previous Year Question | Prelims GS | 2018

Which one of the following statements correctly describes the meaning of legal tender money?

  1. The money which is tendered in courts of law to defray the fee of legal cases
  2. The money which a creditor is under compulsion to accept in settlement of his claims
  3. The bank money in the form of cheques, drafts, bills of exchange, etc.
  4. The metallic money in circulation in a country

Answer

Correct Answer

The money which a creditor is under compulsion to accept in settlement of his claims

Explanation

Legal tender is money that the law obliges creditors to accept in settlement of debts.

Topics: economy, legal tender money, money and banking, money basics