2018 GS Paper I, all questions

UPSC Prelims 2018 · GS Paper I

Question 46: Economy and Social Development

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

aThe money which is tendered in courts of law to defray the fee of legal cases
bThe money which a creditor is under compulsion to accept in settlement of his claims
cThe bank money in the form of cheques, drafts, bills of exchange, etc.
dThe metallic money in circulation in a country

AnswerUPSC’s answer is (b).

Legal tender is money that the law says must be accepted in settlement of a debt; a creditor cannot refuse it. In India, notes issued by the RBI are unlimited legal tender, and coins are limited legal tender up to specified amounts. Cheques, drafts and bills of exchange are not legal tender because a creditor can refuse them. Legal tender is also not limited to metallic money and has nothing to do with court fees.

Why each option is right or wrong
  • (a) Legal tender has nothing to do with paying court fees.
  • (b) Right: the creditor cannot refuse it in settlement of a claim.
  • (c) That describes bank money (credit instruments), which a creditor can refuse.
  • (d) Legal tender includes notes too, not only metallic money.

Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2018, General Studies Paper I, Series A. The paper on upsc.gov.in.