Advertisements
Advertisements
Question
How does the use of money make it easier to exchange things? Give an example.
Solution
Money acts as a medium of exchange as it facilitates exchange through a common medium i.e. currency. With money as a medium, the two components of a transaction namely, sale and purchase can be easily separated. In other words, money eliminates the need for double coincidence of wants for an exchange to take place and can be performed independently of each other. Moreover, money has widened the domain and scope of the et. Today, the market is no more limited to a specific geographical location. This can be verified by the increasing popularity of online transactions. Hence, it can be concluded that money has infused commercialization, which has raised the overall level of economic activities and has made production market-oriented.
APPEARS IN
RELATED QUESTIONS
How does money act as a medium of exchange?
Why is modern currency accepted as a medium of exchange without any use of its own? Find out the reason.
Which one of the following refers to investment?
(A) The money spent on religious ceremonies
(B) The money spent on social customs
(C) The money spent to buy assets such as land
(D) The money spent on household goods
How do the deposits with banks become their source of income?
Describe the vital and positive role of credit with examples.
Why one cannot refuse a payment made in rupees in India?
How does money solve the problem of double coincidence of wants? Explain with an example.
How does money solve the problem of double coincidence of wants? Explain with an example of your own.
Analyse the role of credit for development.
Explain the meaning of 'Currency'.
