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
Transcript
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)
CA Maninder Singh is a Chartered Accountant for the past 14 years and a teacher from the past 18 years. He teaches Science, Economics, Accounting and English at Teachoo
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