Examgyani Team
Asked: November 1, 20232023-11-01T00:55:02+05:30
2023-11-01T00:55:02+05:30In: Social Science
How can money be easily exchanged for goods or services ? Give an example to explain.
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Transactions are made in money because a person holding money can easily exchange it for any commodity or a service. It solves the problem of double coincidence of wants by acting as a medium of exchange For example, a shoe manufacturer wants to sell shoes in the market and wants to buy rice. Under barter system, both parties selling shoes and rice have to agree to buy and sell each others commodities and this creates a problem which is referred to as double coincidence of wants. This problem is overcome by the introduction of money. Now, the shoe manufacturer will sell the shoes for money and with that money he can buy rice.