Correct Option: C. They are not legal tender Detailed Explanation: To understand why the correct answer is C, we need to delve into the definitions and characteristics of money, as well as the specific role of cheques in the economy.

1. Definition of Money: Money is generally defined as anything that is widely accepted as a medium of exchange for goods and services. It must also serve as a unit of account and a store of value. Legal tender is a specific type of money that must be accepted if offered in payment of a debt.
2. Legal Tender: In Nigeria, the legal tender is the Nigerian Naira (NGN). This means that the Naira must be accepted for settling debts and transactions. Cheques, on the other hand, are not classified as legal tender. They are essentially instructions to a bank to transfer money from one account to another, rather than a direct form of money itself.
3. Role of Cheques: While cheques can facilitate transactions, they do not have intrinsic value and cannot be used directly to purchase goods or services. Instead, they require a banking process to convert them into cash or to transfer funds electronically. This reliance on banks and the need for clearance means that cheques do not fulfill the immediate role of money in transactions.
4. Implications of Not Being Legal Tender: Since cheques are not legal tender, they can be refused by merchants or individuals when offered as payment. This lack of universal acceptance further solidifies their status as a non-money instrument in the economy.

Why Other Options Are Incorrect:

• Option A: Their use is confined to business houses: This statement is misleading. While it is true that cheques are often used in business transactions, they are also used by individuals. The limitation of their use to business houses does not define their status as money. Many forms of money can be used in various contexts, and the restriction of use does not inherently disqualify them from being considered money.
• Option B: There are no banks in rural areas: This option is irrelevant to the definition of money. The presence or absence of banks does not determine whether a financial instrument is classified as money. Even in areas without banks, legal tender (like cash) remains money, while cheques would still not qualify as money regardless of banking infrastructure.
• Option D: They are not generally acceptable as a medium of exchange: While this statement has some truth, it is not the primary reason why cheques are not considered money. The key issue is their lack of legal tender status. Even if cheques were widely accepted, they would still not be classified as money because they do not meet the legal definition of money.

Summary of Key Points:

• Money must be widely accepted, a unit of account, and a store of value; cheques do not meet these criteria.
• Cheques are not legal tender in Nigeria, meaning they cannot be used to settle debts directly.
• The reliance on banks for cheque processing limits their function as a medium of exchange.
• Other options either misinterpret the role of cheques or do not address the fundamental issue of legal tender status.

This understanding is crucial for grasping the broader concepts of money and payment systems in economics, especially in the context of Nigeria's financial landscape.