Q18 of 48 Page 1

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

Modern currency is accepted as a medium of exchange:

1. Modern currency is accepted as a medium of exchange because it is authorized by the central government of a country.


2. In India, RBI issues the currency notes and it is illegal for any other organization or individual to issue the currency.


3. The rupee cannot be refused legally as a medium of payment in India.


Explanation: Modern currency does not have use of its own but it derives its value from the government sanction and therefore is widely used.


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