Question

We accept paper money as a medium of exchange because ______________________.

• A. it has gold backing.
• B. the law legalizes it.
• C. Reserve Bank of India has precious metals against which it prints notes.
• D. everyone else accepts it.

Answer 1

The correct option is B the law legalizes it.

We accept paper money as a medium of exchange because the law legalizes it. It is the currency authorized by the government of the country.