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Though a hundred rupees note can be used to obtain commodities worth RS. 100 from a shop, the value of the paper itself is negligible certainly less than RS. 100. Similarly the value of the metal in a five rupee coin is probably not worth RS 5. Why then do people accepts such note &coins in exchange of goods which are apparently more valuable than these? How do you evaluate this statement?
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Though a hundred rupees note can be used to obtain commodities worth R...




Reasons for Accepting Currency Notes and Coins:




1. Trust and Legitimacy:
- Currency issued by the government is recognized as legal tender, which means people have trust in it and accept it as a medium of exchange.




2. Convenience:
- Using currency notes and coins is convenient for day-to-day transactions as they are easily portable and widely accepted.




3. Universal Acceptance:
- Currency notes and coins are universally accepted forms of payment, making them a preferred choice for transactions.




4. Lack of Alternatives:
- In many situations, there may not be a feasible alternative to using physical currency, leading people to accept notes and coins.




5. Psychological Value:
- People attribute value to currency not just based on the material it is made of, but also on the perceived value assigned to it by society and the government.




Conclusion:
Overall, the acceptance of currency notes and coins in exchange for goods and services is based on a combination of trust, convenience, universality, lack of alternatives, and psychological value. While the intrinsic value of the materials used may be low, the perceived value and legitimacy of the currency make it a widely accepted medium of exchange.


Community Answer
Though a hundred rupees note can be used to obtain commodities worth R...
Because these currencies are backed by the cental bank of the nation. Although these currency and coins don't have their own value(intrinsic value) but due to the backing up legally by government and RBI they are legal tender across India. Backing up means that if anyone is not accepting the currency or coins he can be legally punished .
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Though a hundred rupees note can be used to obtain commodities worth RS. 100 from a shop, the value of the paper itself is negligible certainly less than RS. 100. Similarly the value of the metal in a five rupee coin is probably not worth RS 5. Why then do people accepts such note &coins in exchange of goods which are apparently more valuable than these? How do you evaluate this statement?
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Though a hundred rupees note can be used to obtain commodities worth RS. 100 from a shop, the value of the paper itself is negligible certainly less than RS. 100. Similarly the value of the metal in a five rupee coin is probably not worth RS 5. Why then do people accepts such note &coins in exchange of goods which are apparently more valuable than these? How do you evaluate this statement? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Though a hundred rupees note can be used to obtain commodities worth RS. 100 from a shop, the value of the paper itself is negligible certainly less than RS. 100. Similarly the value of the metal in a five rupee coin is probably not worth RS 5. Why then do people accepts such note &coins in exchange of goods which are apparently more valuable than these? How do you evaluate this statement? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Though a hundred rupees note can be used to obtain commodities worth RS. 100 from a shop, the value of the paper itself is negligible certainly less than RS. 100. Similarly the value of the metal in a five rupee coin is probably not worth RS 5. Why then do people accepts such note &coins in exchange of goods which are apparently more valuable than these? How do you evaluate this statement?.
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