what is the needs and importance of money
Answers
Answer:
Importance of money. Money is an essential commodity that helps you run your life. Exchanging goods for goods is an older practice and without any money, you cannot buy anything you wish. Money has gained its value because people are trying to save wealth for their future needs.
Explanation:
Importance of Money
Money is an essential and basic necessity in a modern economy. In the beginning of human existence, human needs were so simple that they could be satisfied by barter system , i.e., exchange of goods for goods. In baster system, an individual produces some goods in greater quantity than what he could consume and then exchanges the extra units with another individual for something he needed in return. Barter system suffered from lack of double coincidence of wants, lack of common measure of value, difficulty in stored of extra goods and indivisibility of goods. The main advantage of using money is that it decomposes a single barter transaction into two separate transaction of Sale and Purchase. People can hold their wealth in the form of money as a generalised purchasing power which can be utilised to buy goods and services as and when they desire. Money s a pivot around which the whole economy revolves. It alone has the power to buy things directly in the market. It does not require to be spent. All economic system-Capitalist, Socialist and Maixed-need money.
Money may not produce anything, but without it, nothing can be produced.
With the help of money, consumers make payment for goods and services.
With the help of money, producers can but raw material, plant and machinery. They can settle their debts and pay corporate taxes.
Money has contributed to economic growth all over the world because it has removed trade barriers.
With the help of money, government realises all taxes, fees, fines, penalties and other sources of public revenue