What is money? Why is modern money currency accepted as a medium of exchange?

Money is the medium of exchange used for exchanging goods, commodities or properties. Before money, barter system was present in the society.

Modern money currency is accepted as a medium of exchange because:

1. The currency is authorized for exchange by the government of the country.

2. In India, the Reserve Bank of India authorizes currency notes and it’s illegal for anyone else to issue notes.

3. No individual can legally refuse payment in rupees so it is used as a medium of exchange.

Note:

Money gets its definition from its function that is it is a medium of exchange. Modern currency is not like the metal coins used in earlier times because it’s easier to handle than money whose value is in it itself like gold coins. Modern money has value through legal sanction.