1. Explain why a market structure in which money is used as a medium of exchange is more conducive to the expansion of trade and exchange than a barter system.
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Answer:
1. Money as medium of exchange: first of all money is used as measure of value, store of value, standard of deferred payments and medium of exchange and other functions too. In this particular question it is asking for money as medium of exchange for expansion of trade and exchange than barter system. lets illustrate this point. Ancient times goods were exchanged for goods which is called barter system. As time passed barter system had its own disadvantages like goods were not equal substitute for each other for (example got for a shirt, etc.) After which money came into existence in different ways like gold coins, silver coins other coins and now notes. which has perfect measuring value, store value and medium of exchange one to one and from one country to other country.
Money as medium of expansion in trade:
1. Easy exchange of goods with money for day today uses.
2. Easy transaction from one place another place because money can be easily convertible with its value.
3. Money can make trade easy, through future payments or deferred payments of salary or pension, or scholarships etc.
4. Domestic trade and international trade can be handled by using money as a base to measure the value and volume of goods and service trade,exchange of currency of one country to other country.
4. money as a medium of exchange helps in converting assets into money and money into assets.
5. Modern times money became mode of transaction from one place to another place through electronic payments transaction where physical need not carry money only ...
Explanation:
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