Why is money accepted as a medium of exchange in India?

Money is accepted as a medium of exchange because:

(i)The currency is authorised by the government of the country.

(ii)The Reserve Bank of India issues currency notes on behalf of the Central Government. As per Indian law, no other individual or organisation is allowed to issue currency.

(iii)Moreover the law legalises the use of rupee as a medium of payment that cannot be refused in setting transactions in India.