What is a ‘legal tender’? What is ‘fiat money’?
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Legal tender is any currency declaredlegal by a government. Many governments issue a fiat currency and then make it legal tender by setting it as the standard for repaying debt. Commodity money, having value based in a commodity such as gold, is prone to fluctuate in value based on that commodity's price changes.
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Legal tender money is a legal status given to an instrument like currency note that it can be used as medium of payment.
Fiat Money is any money that the government declares as legal tender.
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