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 .
