explain the role of money as the medium of exchange
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Money as a Medium of Exchange
Money enables anyone who has it to participate equally in a market. When consumers use money to purchase an item or service, they are making a bid in response to an asking price. This creates order and predictability in the marketplace. Producers know what to produce and how much to charge, and consumers can plan their budgets around predictable pricing.
When money, as represented by a currency, is no longer viable as a medium of exchange, or its monetary units can no longer be accurately valued, there is no predictability, no ability to plan and no way to gauge supply and demand. In short, the markets become chaotic. Prices are bid up for fear of scarcity and the unknown, and supply diminishes because of hoarding behaviour and the inability of producers to replace supply quickly enough.
Money enables anyone who has it to participate equally in a market. When consumers use money to purchase an item or service, they are making a bid in response to an asking price. This creates order and predictability in the marketplace. Producers know what to produce and how much to charge, and consumers can plan their budgets around predictable pricing.
When money, as represented by a currency, is no longer viable as a medium of exchange, or its monetary units can no longer be accurately valued, there is no predictability, no ability to plan and no way to gauge supply and demand. In short, the markets become chaotic. Prices are bid up for fear of scarcity and the unknown, and supply diminishes because of hoarding behaviour and the inability of producers to replace supply quickly enough.
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role of money play a very important role in exchange because in past people were using barter system and it is not easy to find the buyers or borrower according to our wish
so that the money helps in exchanging goods .we can buy anything or sell according to our wish
so that the money helps in exchanging goods .we can buy anything or sell according to our wish
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