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Why is the color termed paper instead of white in swatches?
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Because it doesn't print. If you're going to print on paper that is not white you can change the swatch to display to match the paper. Again, this is a display setting only and will have no impact on output.
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To add to Bob's post, if you ARE printing on colored stock (not as common as it used to be), you can change the Paper Swatch to the paper color as Bob stated. Additionally, if you turn on Overprint Preview (View menu), you will see the impact of your colored stock on your layout.
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To add one more thing to what the others have already said, if the swatch was called white, some people may think it could print white on colored paper... which would not be correct.
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