--%>
Assignment Help - homework help

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 : Explain the markets and prices of the

    Explain the markets and prices of the Market System?

    		•
  • Q : Why does a demand curve slope downward

    Why does a demand curve slope downward?

    		•
  • Q : What does financial leverage specify

    What does financial leverage specify? And also states its limitations?

    		•
  • Q : Define Benefit Cost Ratio or

    Briefly describe the term Benefit Cost Ratio (or B/C Ratio) or Profitability Index (or PI)?

    		•
  • Q : High-convexity portfolios outperform

    An important drawback of "traditional yield spread analysis" is the "failure to take into account future interest rate volatility that would affect the expected cash flow" of a fixed income security. How does option adjusted spread analysis correct for the "failure" of traditional yield spread analy

    		•
  • Q : Market Apparent program For the

    For the question below, utilize the given information. The market for gizmos is competitive, with an increasing sloping supply curve and a downward sloping demand curve. With no govt. intervention, the equilibrium price is $25 and the equilibrium quantity is 10,000 gi

    		•
  • Q : Consumer and producer surplus in the

    In perfectly competitive market, the market demand and market supply curves are provided by Qd = 1000 −10Pd and Qd = 30Ps. Assume that the government gives a subsidy of $20 per unit to each and every seller in the mark

    		•
  • Q : Use of human and material resources

    What are the merits of speciality in the use of human and material resources?

    		•
  • Q : Explaination on Economical Management

    ECONOMICS Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the ex

    		•
  • Q : Illustrate and clarify the economizing

    Illustrate and clarify the economizing problem?

    		•