Modern forms of money are:
1. Currency- paper notes and coins. They are not made of precious things and are not of daily use. They are accepted as a form of money because of government authorization.
2. Bank deposits are also a form of money. People can open bank accounts and make demand deposits.
3. Cheques act as a medium of exchange possible through bank accounts. It’s a paper that makes the bank transfer money from one person’s account to another.
‘Rupee’ is accepted as a medium of exchange because:
1. The Indian government has sanctioned the use of ‘Rupee’ as the currency in India. Only Reserve Bank of India can issue it.
2. No person can legally refuse rupee as payment in India.
Explanation: Modern forms of money basically involve currency and the digital money like in banks. Both of them derive their value from government authorization.
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