AI-generated practice question — model-generated for extra practice, not a previous-year CBSE board question.
Answer: B — Modern currency is accepted as a medium of exchange because it is authorised by the government of the country.
The textbook explicitly states: "It is accepted as a medium of exchange because the currency is authorised by the government of the country." Option C is incorrect — modern currency is not backed by gold. Option D is wrong — currency is issued by the RBI (central bank), not commercial banks.