Money is a medium of exchange used in settling the transactions. Money acts as an intermediate in the exchange process and eliminates the need for double coincidence of wants. As money acts as intermediate, it is also called medium of exchange.
People have exchanged their goods and services since from the beginning. The medium of exchange kept on changing in different phases.
In the modem phase currency notes – paper notes and coins are used as a medium of exchange.
These are not made of any precious metals even though used as a medium of exchange because the government of the country authorizes the currency.
As the law legalizes the use of rupee, so no individual can refuse a payment made in rupees. Therefore, rupee is widely accepted as a medium of exchange.