Why is modern currency accepted as a medium of exchange without any use of its own? Find out the reason.

 

Answer:

Points to Remember:

  • Authorised by the government .
  • Only RBI issues currency notes .
  • No other individual or organisation is allowed to issue the currency.
  • Only the “rupee” can be used as a payment .
  • Payment made in rupees cannot be refused in India.

Answer to be written:

Modern currency is accepted as the medium of exchange due to the following reasons:

  • Currency is authorised by the government of a particular country. Like in India, our currency “the rupee” is authorised by the government of India .
  • In India, central government currency notes are issued exclusively by the RBI .
  • Therefore, no other organisation or individual is allowed to issue currency.
  • The law legalises the use of “rupee” as a medium of payment that cannot be refused by any individual.
  • No individual in India can legally refuse a payment made in rupees .
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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 14 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.