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Question

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


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

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. 

Economics

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