How has money solved the problem of trade by barter
How has money solved the problem of trade by barter
Trade by barter refers to the direct exchange of goods and services
The introduction of money has solved the problems of trade by barter in a number of ways
- Money as a medium of exchange
It has solve the problem of double coincidence of wants.This is because people sell what the have for money and buy other goods and services
- Money as a standard of differed payment
This has solved the problem of payment in future.Today peppy can now buy goods and services on credit and payment is done in future
- Money used as a measure of value
The prices of goods and services reflect their value.Therefore with money the price of a kilogram of any commodity is known and this solve the problem of exchange rate
- Money as a unit of account
Records or payment and receipts are kept in monetary unit which will enable people to easily understand their account which have solved the problem obtained in measuring values
- Money as a store of value
Money as a store of value solved the problem of absence of storage facilities.This is because people sell perishable commodities which are goods which cannot stay for a longer period and their value is stored in the form of money
- Money as a unit of account
Records or payment and receipts are kept in monetary unit which will enable people to easily understand their account which have solved the problem obtained in measuring values
- Money as a store of value
Money as a store of value solved the problem of absence of storage facilities.This is because people sell perishable commodities which are goods which cannot stay for a longer period and their value is stored in the form of money
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