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Question

Why is paper money denoted as a promissory note?


A

The extrinsic value of a paper note is more than its intrinsic value

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B

A definite sum of value is printed on paper notes

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C

Due to greater demand for money as a medium of exchange

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D

Due to gradual expansion of trade and commerce

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Solution

The correct option is B

A definite sum of value is printed on paper notes


The issuing government authority promises to pay the bearer of paper notes a definite sum of value as printed on those paper notes. Hence, they are called promissory notes.


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