Question

In a barter system goods are directly exchanged without the use of money. When different people
agree to buy and sell each other's commodities, exchange take place. This is double coincidence of
wants. In contrast, in an economy where money is in use, money act as intermediate in the exchange
process and eliminates the need for double coincidence of wants. Now, money is used as a medium
of exchange. Earlier Indians used grains and cattle as money. Thereafter came the use of metallic
coins-golds, silver, copper coins Now modern forms of money include currency - paper notes and
coins. Unlike the things that were used as money earlier, modern currency is not made of precious
metal such as gold, silver and copper. And unlike grain and catile, they are neither of everyday use.
The modern currency is without any use of its own, but people accept as a medium of exchange
because the currency is authorized by the government of the country. In India Reserve Bank of India
issues currency notes on behalf of the central government Deposits with banks are also money in
modern economy, as facility of cheque enables to directly settle payment without the use of cash.
Answer the following MCQs by choosing the most appropriate option
26.1. The most difficulty of barter system is
A Double coincidence of wants
B. No difficulty arises in exchange
C Lack of double coincidence of wants
D. Lack of measure of value
(
1)
26.2 Modern currency notes in India are issued by
A. Government of India
B. Reserve Bank of India
C. Commercial Banks
D. Parliament
(1
)
26.3. Why a deposit with bank is considered as modern form of money?
A. Because deposit amount is with the bank
B. Because it is ordered by government
C. Because cheque enable to settle payment without the use of cash
D. None
26.4. Earlier grains and cattle are used as money, nowadays currency notes and coins are used as
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Answer 1

Answer:

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