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Why is paper ...

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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Similar questions

Q. State whether the following statements are true or false.
1. Metallic coins are easily portable than paper notes.
2. Token coins are coins whose face value is greater than their intrinsic value.
3. Money facilitates estimation of national income.
4. A cheque is a fiat money.
5. Money increases productivity of capital.

Q. Why is paper money used as a medium of exchange across the world?

Q. Fill in the blanks with appropriate alternatives given in the brackets.
1) Medium of exchange is __________ function of money. (primary/secondary/contingent/ additional)
2) In the case of __________ coins, intrinsic value is less than their face value. (token/full bodied/representative/standard)
3) The most liquid asset is __________. (cheque/money/shares/debentures)
4) Introduction of __________ removed difficulties of barter. (metals/bank/money/shares)
5) In the initial stage of development, __________ was used. (credit money /paper notes/ metallic coins/commodity money)

We accept paper money as a medium of exchange because

Q. We accept paper money as a medium of exchange because _____.

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