Question

QUESTION - __________________ How does money solve double coincidence of wants? __________________

Answer 1

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♠Money solves the problem of double coincidence of wants by acting as a medium of exchange.

♠Double coincidence of wants implies a situation where two parties agree to sell and buy each other’s commodities., i.e., what one party desires to sell is exactly what the other party wishes to buy.

♠ Money does away with this tedious and complex situation by acting as a medium of exchange that can be used for one and all commodities.

♠For example, if an ice-cream vendor wants a bicycle but the bicycle manufacturer wants clothes, and not ice-creams, then the vendor can use money to obtain a bicycle.

♠ He does need to adhere to the bicycle man’s needs because money acts as the common medium of exchange.

♠ Similarly, the bicycle manufacturer can then use the money to buy clothes.

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Answer 2

Answer:

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→Money solves the problem of double coincidence of wants by acting as a medium of exchange.

→ Double coincidence of wants implies a situation where two parties agree to sell and buy each other's commodities., i.e., what one party desires to sell is exactly what the other party wishes to buy.