A tender may be of money or of specific articles; these will be separately considered. This is especially true in regards to what the government accepts and uses for the payment of debt, as well as for taxes, although taxes are not a debt in the pure sense of the word. See more. The term "legal tender", sometimes shortened to "tender", refers to legal currency that can be used to to pay for a good or service. Bank notes issued by the Bank of Canada, together with coins issued by the Royal Canadian Mint, are what is known as “legal tender.” That’s a technical term meaning the Government of Canada has deemed them to be the official money we use in our country. How does Fiat Money work? Paper notes in India. Legal tender is a term that officially refers to specific payment options that are tendered — or offered — to fulfill a debt and which must be accepted by the lender. If a person refuses to accept this money legal action can be taken against that person. 3.) answer choices . The laws surrounding legal tender have proved vital in the formation of the fiscal policy of many nations. 2.) Sec. 31 USC 5103 states: “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.” As the U.S. Treasury Department has noted, however, there is no Federal law requiring a business to accept cash as payment: mortgage. Legal Reserve Ratio: It is the minimum ratio of deposits legally required to be kept by the commercial banks with themselves and with the central bank. Fiat money is worthless may be used as a medium of exchange, but is not legal tender refers to highly liquid assets that do not serve as the medium of exchange. Due to the large numbers of coins and paper money produced globally since the 20th century, most circulating legal tender produced during that era will hold only a nominal collector's value over the face value amount. Paper bills or money issued by the Central Bank are valid legal tenders for any amount unlike coins. Asset-backed monies derive their value, at least in part, from the assets backing the money. Demonetization is an economic process in which a country’s currency unit is no longer legal tender. fiat. The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. Legal tender is a medium of payment recognized by a legal system to be valid for meeting a financial obligation. The value of Money Multiplier where LRR = Legal Reserve Ratio. So, there are two ratios which play an important role in the determination of the value of the money multiplier. Currency is often referred to as a legal tender as it is approved by the government and can be used domestically anywhere as a method of payment to be used and the government will accept it in the payment of the taxes. The United States Mint is the only entity in the United States with the lawful authority to mint and issue legal tender United States coins. Money can also function as a “standard of deferred payment,” which means that its status as a legal tender allows it to function for the discharge of debts. To make la valid tender the following requisites are necessary: 1. Legal tender = The definition of legally-valid money Although the United States had been a country for close to a century at the time, the federal government didn’t officially start printing paper money (notes) until 1861, in order to fund the Civil War that had just begun without raising taxes. legal tender n noun: Refers to person, place, thing, quality, etc. portability. Generally, the term refers to government-issued cash money such as bills and coins, as opposed to credit lines, checks, or cards. Legal tender is any form of payment that must be accepted for a debt, according to the laws of the area. stability in value. ... it works because the government says it is legal tender and you believe it has purchasing power. It also restored the value of U.S. Trade Dollars that had previously been demonetized. In 1965 the Coinage Act was passed and defined the United States legal tender as U.S. coins and currency. Fiat money or fiat currency is any money that the government declares as legal tender. A United States Note / Legal Tender Note is a type of paper money that was issued by the U.S. government from 1862 to 1971. Examples of fiat money without legal tender status include Rai stones or Ithaca HOURs. And Bitcoin is just another example of fiat money. And debts believe it has purchasing power that is declared legal tender up to.... 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