How does money solve the problem of double coincidence?
Answers
Answer:
My bro here is your answer:-
Double coincidence of wants is an essential feature in a barter system where goods are directly exchanged without the use of money. But on other hand in an economy where money is in use, money by providing the crucial intermediate step eliminates the need for double coincidence of wants.
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Answer:
Double coincidence of wants is an essential feature of the barter system of exchange, where goods are exchanged for goods directly. In such a case, it becomes necessary that both the sides involved in the exchange agree to buy each others commodities. This is called doubled coincidence of wants. What one person sells is exactly what the other wishes to buy. But it is a major problem in exchange since such a situation can't be created easily. Money solves this problem by acting as an intermediate medium of exchange. With money, the double coincidence of wants no longer needs to be satisfied as one can sell or buy commodities using it alone.
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