--%>

Elucidate the use of money as a medium of exchange

Elucidate the use of money as a medium of exchange in Market System?

E

Expert

Verified

1. Money substitutes for barter, which requires a coincidence of wants.  (I may want what you produce but you may not want to exchange for what I have.)

2. Willingness to accept money in place of goods permits 3-way trades (or multilateral trades).

a. Floridians give money to Nebraskans for wheat who give money to Idahoans for potatoes who give money to Florida for oranges.

b. Foreign exchange markets permit Americans, Japanese, Germans, Britons, and Mexicans to complete international exchanges of goods and services.

c. Detroit autoworker produces crankshafts for Buicks.  If the worker were paid in crankshafts, he would have to find grocers, clothing retailers, etc., who would be willing to exchange their products for a crankshaft.  It is much more efficient to use money wages than to accept one’s wages in crankshafts!

   Related Questions in Business Economics

  • Q : Goods and services are scarce because

    Explain:  “Goods and services are scarce because resources are scarce.”  Analyze:  “It is the nature of all economic problems that absolute solutions are denied us.”

  • Q : Elucidate the various trade which

    Elucidate the various trade which enacted by governments?

  • Q : Construct a 2-D graph which comprises

    How to construct a 2-D graph which comprises drawing a horizontal and a vertical axis?

  • Q : Major implication of invisible hand of

    The major implication of Adam Smith’s conception of an “invisible hand” was such that: (w) pursuit of individual self interest must be controlled. (x) most people lose sight of what’s good for society. (y) most

  • Q : Write short note Economics Write short

    Write short note Economics?

  • Q : Depreciation of the euro change the

    If the European euro declines in value (depreciates) in the foreign exchange market, would it be easier or harder for the French to sell their wine in the United States?  Suppose you were planning a trip to Paris.  How would the depreciation of the euro chan

  • Q : Define the ability of goods by wealth

    According to Adam Smith nation's wealth is, not the gold this possesses, but somewhat it’s: (1) number of people. (2) capability to give goods for its people. (3) foreign investments. (4) domestic financial capital. (5) militar

  • Q : Competitive market economy will make

    Briefly explain how the competitive market economy will make the needed adjustments to reestablish an efficient allocation of society’s scarce resources?

  • Q : Example of public goods Drinking at a

    Drinking at a public water fountain is: (w) a public good because anyone may drink from it. (x) results in a negative externality because others can’t drink from this at similar time. (y) a positive externality because you are benefiting by other’s provisi

  • Q : Economic bailout of Spain and Greece

    Question: Conduct an analysis on the following topic and prepare an Executive Summary-style report with supporting exhibits (Insightful Graphs, tables etc. from quality expert analyst references used to write the r