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Question
Rahul has a sack of cotton but he is in need of wheat and Anush has a sack of wheat and is in need of cotton, under this situation both will be able to exchange their goods. In case of absence of such coincidence of wants, they may not exchange their goods.
Which one of the following would be the best option that describes the mutual exchange of goods and eliminate the exchange of goods?
Options
Double coincidence of want, Exchanging commodity for commodity.
Double Coincidence of want, Credit on Commodity.
Double coincidence of want, Loan on commodity.
Double coincidence of want, Money.
Solution
Double coincidence of want, Money.
Explanation:
- When two persons have what the other wants and are prepared to trade, this is referred to as a double coincidence of wants.
- Money was created as a medium of exchange in order to do away with the necessity for such an accident.
- Therefore, money streamlines commerce and resolves the issue with the barter system.
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RELATED QUESTIONS
Name the system in which the double coincidence of wants is an essential feature.
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Money ______.
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