what is money? importance of money. advance & disadvantage of money.
Answers
1. Instability. A great disadvantage of money is that its value does not remain constant which creates instability in the economy. Too much of money reduces its value and causes inflation (i.e., rise in price level) and too little of money raises its value and results in deflation (i.e., fall in price level).
Answer:
Money is a paper instrument that helps in the market to regulate the exchange of goods and services and accept as the payment as well as incomes. These paper instruments are issued by RBI ( Reserve Bank of India ) that are notes of 5 rupees to 2000 notes. Every note has a certified value on it. The coins and 1 rupee note is issued by the Finance Ministry of the Nation. The money also is made up of metals like gold, silver or copper that are valued as the number of metals used in.
Importance of money -
• Works as a medium of exchange - Money is issued to bring efficiency and effectiveness in the market place to have the quick exchange of goods and services.
• Easy payment - It made the payment decision easy by removing the confusion of their respective values and amount because money has its specific values.
• Deferred payment - Sometimes, no having sufficient money to pay off at a time of purchase leads to the clash of obtaining the goods and services. Whereas, money helps to pay the value in the future.
• Fixed value - Money, the notes denoted has a certain value assigned. These lead to a better understanding in regards to the exchange of goods and services.
• Stock up - Money can be stocked up whereas when goods are exchanged for goods decided of buying difficult due to the nature of goods they are exchanged in.
Advantage of Money -
• Easy payment can be made through the help do money.
• Money can be stocked up as per the need.
• Money has a fixed value over time.
• Money can be transferred easily.
Disadvantages of money -
• Giving more value to the material it is made off.
• Damage of physical value of the money.
• Hoarding of the money is only a specific sector of the market.
• Inequality of the income due to the uneven distribution.