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Modern Currency Characteristics

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Questions and Answers

What primarily distinguishes modern currency from earlier forms of money?

It is universally accepted in everyday transactions.

It is used primarily for trade between countries.

It does not have intrinsic value of its own. (correct)

It is made of precious metals.

Who is authorized to issue currency notes in India?

Private banks

The Reserve Bank of India (correct)

Foreign governments

The Ministry of Finance

Why is modern currency accepted as a medium of exchange?

It is backed by gold reserves.

It is universally recognized by all countries.

It is authorized by the government. (correct)

It is made from durable materials.

What does Indian law stipulate about payments made in rupees?

They cannot be refused in settling transactions. Signup and view all the answers

In comparison to items such as grain or cattle, how is modern currency characterized?

It is not a necessity in everyday use. Signup and view all the answers

What role does the government play in the acceptance of modern currency?

The government authorizes modern currency, making it acceptable as a medium of exchange. Signup and view all the answers

What is the significance of the Reserve Bank of India in relation to currency?

The Reserve Bank of India issues currency notes on behalf of the central government. Signup and view all the answers

How does Indian law affect the acceptance of payments made in rupees?

Indian law legalizes the use of rupees as a medium of payment that cannot be refused. Signup and view all the answers

Why can't other individuals or organizations issue currency in India?

Only the Reserve Bank of India is allowed to issue currency to maintain financial order and prevent counterfeiting. Signup and view all the answers

In what ways does modern currency differ in function from items like grain or cattle?

Modern currency has no intrinsic use; its value comes from government authorization rather than utility. Signup and view all the answers

Study Notes

Modern Currency Characteristics

Modern money includes paper notes and coins, which are not made of precious metals like gold, silver, or copper.
Unlike earlier forms of money (grain, cattle), modern currency has no intrinsic value; it is without any use of its own.
Modern currency is accepted as a medium of exchange due to government authorization.
The Reserve Bank of India (RBI) issues currency notes in India on behalf of the central government.
Indian law prohibits any other entity from issuing currency.
The law mandates that rupees are legal tender, meaning they cannot be refused in transactions.
Individuals in India cannot legally refuse payment in rupees.
Modern currency is widely accepted as a medium of exchange.

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Description

Explore the essential features of modern currency, including its evolution from intrinsic value forms to government-backed currency. Understand the role of the Reserve Bank of India in issuing currency and the legal implications of rupees as legal tender in India.