Question

1. What are the modern forms of Money?
2. Why is the 'rupee' widely accepted as a medium of exchange? Explain two reasons.

Answer 1

The modern forms of Money are:

1. Paper notes- Paper notes consist of currency notes issued by the State Treasury or the Central Bank of the country.
2. Coins- Coins are special metallic structure made out of various metals like bronze, nickel,.. etc.
3. Bank deposits- Bank deposits are also a form of money. People can open bank accounts and make demand deposits.

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'Rupee' is widely accepted as a medium of exchange because:

• The Indian government has sanctioned the use of 'Rupee' as the official currency of India.
• No person within India, can legally refuse rupee as mode of payment in India.
• Rupee is issued and monitored by Reserve Bank of India (RBI) only.