QUESTIONS
1. Why does the Government allow payment to be made in paper notes ?
2.
What is more valuable, to have 100 rupee-coins in silver or a Rs. 100 note in pape
3.
If metal is so cumbersome, why should we not have only paper
money ? Why should we not print as much of it as possible ?
4. What is the real use of money?
5.
Why should the prices of commodities go up when there is plenty
of paper money ?
6. Why does the Government print only a certain number of paper
notes, and not as many as it likes arbitrarily?what is the real use of money
i need ans of that
Answers
Answer:
Hey, This is your answer
1. the reason for this is that paper is much easier to be carried around than carrying sliver or goal an if damage its easier to be replaced.
2. The silver coins would be more valuable - as the price of silver fluctuates. The value of the paper is irrelevant.
3. Paper is lighter than metal, it also saves use of silver and other metals when they are scarce. Perhaps you may ask "Then why not have paper money only?" The answer is, it would be impossible to print just the right amount of paper money that would keep prices at their proper natural level.
4. Money serves as a medium of exchange, as a store of value, and as a unit of account. Medium of exchange. Money's most important function is as a medium of exchange to facilitate transactions.
5. Commodity markets can be very volatile and it may seem like there is no rhyme or reason to their movement. The basic explanation I can give you is that commodity prices move because of supply and demand issues. Whenever the market interprets there will be lower supply, prices tend to move higher.
6. The answer is Inflation, because the currency notes that we use do not have any intrinsic value. They only have exchange value. That means a $1 note does not actually mean its value is 1$ but it means you can exchange it for goods/services worth 1$.
Explanation: