Chapter 3 Part 1 - Money
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Chapter 3 Part 1 - Money
Last updated at April 16, 2024 by Teachoo
It was introduced to overcome shortcomings of Barter System
| PROBLEMS IN BARTER SYSTEM | BENEFITS OF MONEY SYSTEM | |
| Double Coincidence of Wants | Want Can be of One person also (and not both) | |
| No Proper Unit of Account | Proper Unit of Account | |
| Difficult to Carry forward one's wealth | Easier to carry forward money to future | |
| High Storage Cost | Money Can be easily stored | |
| Not Acceptable to Everyone | Universally accepted | |
| Lack of Divisibility | Easily Divisible | |
How does Money overcome shortcoming of Barter System BARTER SYSTEM PROBLEMS MONEY SYSTEM BENEFITS Double Coincidence of Wants (Both person should need each other goods or service) High Storage Cost (Product purchased or sold has to be stored in warehouse/godown) Difficult to Carry forward wealth (Some items are perishable, cannot be transferred to future generation) No Proper Unit of Account (No fixed price of a product, price varies with product exchanged) Want Can be of One person also (Only one person may need the good And not both person) Money Can be easily stored (It is easier to save notes than goods No need of godown/warehouse) Easier to carry forward money to future (Father can save his wealth in form of bank notes and give to his future generation) Proper Unit of Account (Price of All goods is measured in terms of Rupees)
