Removal of Difficulties :
Under the following headings we understand how money removes the problems of barter system:
1. Double Coincidence of wants:
Money as medium of exchange has removed the double coincidence of wants. Under monetary system money is exchanged for goods and services when people buy things gods and services are exchanged for money when people self things, there is no necessity for a double coincidence of wants in the presence of money.
2. Common Measure of Value:
Money has overcome the difficulty of common measure of value by acting as a standard of value. In a money economy the value of any commodity can easily be expressed in terms of money.
3.Store of Value:
Money has removed the difficulty of future payments. Future payments are made in terms of money.
There is no problem in receiving and making payments in future.
4. Future payments:
Money has overcome the difficulty of future payments. Future payments are made in terms of money.
There is no problem in receiving and making payments in future.
5. Sub Division:
Money has solved the problem of sub-division of commodities because money is easily divisible. With the help of money one can exchange individual commodity of great value for a commodity of less value. Money has make it possible to buy goods of both high and low value.
6. Transfer of Value:
Money has made easy the transfer of wealth from one place to an other place. A person can sell his immovable and movable property or things at one place and transfer his wealth to another place in terms of money.
7. Standard of Value:
Under the system of exchange i.e sales and purchase the value of each commodity is expressed in terms of standard of value. So money is used as standard of value.
8. Tax collection:
Money has removed the difficulty of tax collection. Tax can easily be collected in the form of money.
Government can easily utilize the revenue received for development and non- development purpose.
9. Capital Formation:
Money has encourage the capital formation. One can easily store one's wealth in the form of money without suffering loss.
So these were the headings which describe how money removed the difficulties of barter system.
Under the following headings we understand how money removes the problems of barter system:
1. Double Coincidence of wants:
Money as medium of exchange has removed the double coincidence of wants. Under monetary system money is exchanged for goods and services when people buy things gods and services are exchanged for money when people self things, there is no necessity for a double coincidence of wants in the presence of money.
2. Common Measure of Value:
Money has overcome the difficulty of common measure of value by acting as a standard of value. In a money economy the value of any commodity can easily be expressed in terms of money.
3.Store of Value:
Money has removed the difficulty of future payments. Future payments are made in terms of money.
There is no problem in receiving and making payments in future.
4. Future payments:
Money has overcome the difficulty of future payments. Future payments are made in terms of money.
There is no problem in receiving and making payments in future.
5. Sub Division:
Money has solved the problem of sub-division of commodities because money is easily divisible. With the help of money one can exchange individual commodity of great value for a commodity of less value. Money has make it possible to buy goods of both high and low value.
6. Transfer of Value:
Money has made easy the transfer of wealth from one place to an other place. A person can sell his immovable and movable property or things at one place and transfer his wealth to another place in terms of money.
7. Standard of Value:
Under the system of exchange i.e sales and purchase the value of each commodity is expressed in terms of standard of value. So money is used as standard of value.
8. Tax collection:
Money has removed the difficulty of tax collection. Tax can easily be collected in the form of money.
Government can easily utilize the revenue received for development and non- development purpose.
9. Capital Formation:
Money has encourage the capital formation. One can easily store one's wealth in the form of money without suffering loss.
So these were the headings which describe how money removed the difficulties of barter system.
Thank you. You really helped me in my test
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