Question

What is currency? Explain its any five advantages?

Answer 1

Any commodity which is generally acceptable as a medium of exchange and at the same time serves as a measure of its value and store of value, is called money. The advantages of money are as follows:

1. Freedom from barter defects : Money has made a medium of exchange and measurement all types of buying and selling have been made easy money has eliminated the problem of division. Money has completely freed man from the difficulties of barter.
2. Promotion of International Co-operation : By use of money international Co-operation has been encouraged, because not only through money mutual transactions between different countries have increased a lot already, but in the place of political and cultural exchange has also accelerated.
3. Indicator of Progress : If the price of a country's currency keeps on falling, then it would be correct to understand that the economic condition of that country is weak. On the contrary, the economic condition of countries whose currency value remains stable is considered to be good. Therefore, money is an indicator of the progress of the country.
4. Credit basis : The whole structure of modern business is based on credit. Banking institutions try to keep the roots of the economic system green by lending capital to trade and industry. The basis of all the credit is money. In the absence of money, the credit system will end.
5. Distribution of National Income : Money has taken all the national income provide the facility of equitable distribution. Now-a-days different means of production work together and get their own reward in the form of money. This finance of national income can be possible only through money.