ECONOMICS (CBSE/UGC NET)

ECONOMICS

MONETARY POLICY

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
In Christmasland candycanes of all sizes are used as currency. The reason this type of money serves its function as a medium of exchange is because it is
A
very portable
B
highly divisible
C
prized in foreign nations
D
accepted as payment in exchange for goods and services
Explanation: 

Detailed explanation-1: -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.

Detailed explanation-2: -The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability.

Detailed explanation-3: -Why is currency accepted as a medium of exchange? (a) Because the currency is authorised by the government of the country.

Detailed explanation-4: -The correct answer is Fiduciary Money. Fiduciary money is money that is accepted as a medium of exchange due to the trust that exists between the payer and the payee.

There is 1 question to complete.