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Why was Money Introduced?

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 - Teachoo.JPG

BARTER SYSTEM PROBLEMS & MONEY SYSTEM BENEFITS.JPG


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's photo - Co-founder, Teachoo

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 12 years and a teacher from the past 16 years. He teaches Science, Economics, Accounting and English at Teachoo