Why are transactions made in money? Explain with examples.
MONEY acts as a medium of exchange in transactions. A person holding money can easily exchange it for any commodity or service that he or she might want. Everyone prefers to receive payments in money or any form of money and then exchange the money for things that they want. Money provides the crucial intermediate step to eliminate the need for double coincidence of wants. If we have money in our pocket, we can purchase from the market anything which we want to purchase.
- Money is executed by Reserve Bank of India.
- No other individual or organisation is allowed to issue currency.
- Law legalises the use of rupee as medium of payment that cannot be refused in setting transactions in India. No individual can refuse a payment made in rupee.