Question

money is a static sence refers to?​

Answer 1

Answer:

(i) By serving as a medium of exchange, money removes the need for double coincidence of wants and the inconveniences and difficulties associated with barter. The introduction of money as a medium of exchange breaks up the single transactions of barter into separate transactions of sales and purchases, thereby eliminating the double coincidence of wants. Instead о exchanging commodities directly with commodities i.e. С ↔ С, commodities as С → M → C, where С refers to commodities and M to money.

(ii) By acting as a unit of account, money becomes a comes a common measure of value. The use о money as a standard of value eliminates the necessity of quoting the price of apples in terms of organes, the price of organes in terms of nuts, and so on. Money is the standard of measuring value and value expressed in money is price. The prices of different commodities are expressed in terms of so many units of dollars, rupees, pounds, etc. depending on the nature of monetary unit in a country. The measurement of the values of goods and services in the monetary unit facilitates the problem of measur­ing the exchange values of goods in the market.

(iii) Money acts as a standard of deferred payments. Under barter, it was easy to take loans in goats or grains but difficult to make repayments in such perishable articles in the future. Money has simplified both taking and repayment of loans because the unit of account is durable. It also overcomes the difficulty of indivisibility of commodities.

(iv) By acting as a store of value, money removes the problem of storing of commodities under barter. Money being the most liquid asset can be kept for long periods without deterioration or wastage.