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a government law about “legal tender” is necessary for money to exist. True or False

a government law about “legal tender” is necessary for money to exist. True or False

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Expert Solution

The answer is False

A government law about "legal tender" is not necessary for money to exist. Fiat money must be required for tax payments bythe government for it to exist.

Legal tender is a medium of payment recognized by a legal system to be valid for meeting a financial obligation. Paper currency and coins are common forms of legal tender in many countries. Legal tender is variously defined in different jurisdictions. Formally, it is anything which when offered in payment extinguishes the debt. Thus, personal cheques, credit cards, and similar non-cash methods of payment are not usually legal tender. The law does not relieve the debt obligation until payment is tendered. Coins and banknotes are usually defined as legal tender. Some jurisdictions may forbid or restrict payment made other than by legal tender. For example, such a law might outlaw the use of foreign coins and bank notes or require a license to perform financial transactions in a foreign currency.

Rahul Sunny answered 1 year ago
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