Question

What is money ?Why is modern money accepted as mode of exchange

Answer 1

Money is something that can act as a medium of exchange in transaction.....  Modern money is accepted as a mode of exchange bcoz of the following reasons: i. Modern forms of money include currency - paper notes and coins.  ii. Modern currency is not made of precious metals such as gold and silver. iii. The modern currency is without any use of its own.  iv. In India,  RBI issues currency notes on behalf of the central govt. v. As per the Indian law, no other individual or organization is allowed to issue currency.  vi. No individual in India can legally refuse a payment in rupees.

Answer 2

When money is used to intermediate the exchange of goods and services, it is performing a function as a medium of exchange. It thereby avoids the inefficiencies of a barter system, such as the "coincidence of wants" problem. Money's most important usage is as a method for comparing the values of dissimilar objects.