It is accepted as a medium of exchange because the currency is authorized by
the government of the country.
(ii) In India, the Reserve Bank of India issues currency notes on behalf
of the Central Government.
(iii) As per Indian law, no other individual or
organisation is allowed to issue currency.
(iv) Moreover, the law legalises the use of rupee as a
medium of payment that cannot be refused in settling transactions in India.
(v) No individual in India can legally refuse a payment
made in rupees.
Hence the rupee is widely accepted as a medium of
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