10 Pages Posted: 3 Nov 2008
Date Written: October 13, 2008
The legal foundation of the monetary system is the law of legal tender. The "legal tender" concept is used in economics textbooks and journals to describe almost anything except for what it really means in actual laws. Such errors mislead students and prevent an accurate evaluation of the importance of this legal status. This note explains in simple terms what "legal tender" really means and how it could be better explained in textbooks and in the classroom.
JEL Classification: E42, K12
Suggested Citation: Suggested Citation