UrbanPro
Login Ask & Answer Success Stories Paid Courses Free Classes Tuition & Classes Fees Write a Review All Categories Help Center
Post your Learning Need Signup as a Tutor
✕

Popular Cities

Bangalore

Hyderabad

Delhi

Mumbai

Chennai

Pune

Kolkata

Gurgaon

Ahmedabad

Jaipur

Noida

✕

Take Class 12 Tuition from the Best Tutors

  • Affordable fees
  • 1-1 or Group class
  • Flexible Timings
  • Verified Tutors

Book a Free Demo

Class 12 Tuition > Learn Economics > How is money used as a medium of exchange? Explain.
✕

Search in

How is money used as a medium of exchange? Explain.

Asked by Last Modified  

2 Answers

Learn Economics +1 Class XI-XII Tuition (PUC)

Follow 1
Answer

Please enter your answer

A medium of exchange is an intermediary instrument used to facilitate the sale, purchase or trade of goods between parties. For an instrument to function as a medium of exchange, it must represent a standard of value accepted by all parties. In modern economies, the medium of exchange is currency. The...
read more

A medium of exchange is an intermediary instrument used to facilitate the sale, purchase or trade of goods between parties. For an instrument to function as a medium of exchange, it must represent a standard of value accepted by all parties. In modern economies, the medium of exchange is currency.

The use of a medium of exchange allows for greater efficiency in an economy and creates more trade. In a traditional barter system, trade between two parties could only occur if one party had and wanted what the other party had and wanted, and vice versa. But the chances of this occurring at the same time are minimal. Let's say one party had a cow and the other had a lawn mower: with a medium of exchange such as gold coins, all the cow owner would have to do is find a buyer for the cow and she would receive gold coins. Then all she would have to do is find someone selling a lawn mower, which she could purchase with gold coins.

Money enables anyone who has it to participate equally in market. When consumers use it to purchase something, they are essentially making a bid in response to an asking price. That is what brings order and predictability to the marketplace. Producers know what to produce and how much to charge and consumers can plan their budgets around predictable pricing.

When money, as represented by a currency, is no longer viable as a medium of exchange, or its monetary units can no longer be accurately valued, there is no predictability, no ability to plan, no ability to gauge supply and demand. In short, the markets become chaotic. Prices are bid up for fear of scarcity and the unknown, and supply is diminished from hoarding and the inability of producers to replace it quickly enough.

Alternative currencies have been used throughout time as a means to spur commerce or augment a national currency in times of economic duress. In the early 20th century, companies were forced to issue company scrip and other forms of emergency currency in order to pay their workers massive bank failures caused wide-spread cash shortages. The scrip could be redeemed for food and services or held for future redemption in U.S. Dollars when they became available.

read less
Comments
Dislike Bookmark

IITian, XLRI; CAT - 99.37 || XAT - 99.88

In order to understand this, let's go back to the barter system that originated in pre-historic times. The system can most simply be described as a system of give and take. For example, if you need goats and the other person needs horses, you simply exchange them. But what if you now want a cow but the...
read more

In order to understand this, let's go back to the barter system that originated in pre-historic times. The system can most simply be described as a system of give and take. For example, if you need goats and the other person needs horses, you simply exchange them. But what if you now want a cow but the person having a cow doesn't want the horse that you have? This is where money comes into the picture. Money is nothing but a universally agreed tender which can be exchanged for goods and services.

read less
Comments
Dislike Bookmark

Related Questions

Is it necessary to join coaching classes after class 11?
First of all to join school is important but it also depend on your school standards. If teacher are good and provide best which is important to you than must join otherwise can take tution classes outside...
K.
0 0
5

What will be the effect of change in income on giffin goods and normal goods ? 
Giffen goods are a special kind of inferior products in which demand increases when price increases. But in the case of income changes, there's an inverse relationship between market and income. With an...
Suneha Sharma
0 2
7
How do I start preparing for JEE MAINS from class 11 without using coaching?
Just go through your ncert text books,concepts should be clear,practice no.of questions for each topic.try to make proper schedule for your study.focus on your pcm subjects,take help of refresher books which clear your base more easily
Vishvajeet
0 0
5
What is the fee for a student going to class 11 for JEE coaching?
fees for JEE coaching (11th or 12th) its depends upon which coaching your joining like if u will go KOTA and your joining RESONANCE, BANSAL, ALLEN, MOTION, VIBRANT, CAREER POINT almost all coaching will...
Saddam
0 0
6
Is coaching necessary for the CBSE class 12?
It is not necessary if subject teachers know their subjects and teach it sincerely in the classroom.
Sriomprakash
0 0
5

Now ask question in any of the 1000+ Categories, and get Answers from Tutors and Trainers on UrbanPro.com

Ask a Question

Related Lessons

Utility and its features
What is Utility and what are its features?

Rajiv Vadera

0 0
0
What is Monetary Policy Committee (MPC) ?
The new MPC is to be a six member panel that is expected to bring "VALUE and TRANSPARENCY" to rate setting decisions. It will feature three members from the RBI- the Governor, a Deputy Governor , and another...

Sunny Kumar

0 0
0
ELASTICITY of demand

Manik

0 0
0
How Can The Fiscal Windfall Be Used To Solve The Problem Of Twin Balance Sheet?
By using the finances in the windfall for strengthening the government's balance sheet rather than for government consumption. The Chief Economic Advisor suggests that:"The best use of windfall would...

Amruta M.

0 0
0
Macroeconomics: GDP and other indicators.
Need for the indicators in Macro analysis? Like the accounts of a business, national income accounts have two sides: a product side and an income side. The product side measures production and sales....

Ishwar Jangid

0 0
0

Recommended Articles

Meet Raghunandan.G.H, a B. Tech Tutor from...

Raghunandan is a passionate teacher with a decade of teaching experience. Being a skilled trainer with extensive knowledge, he provides high-quality BTech, Class 10 and Class 12 tuition classes. His methods of teaching with real-time examples makes difficult topics simple to understand. He explains every concept in-detail...

Read full article >

Meet Sandhya R, a B.Sc tutor from Bangalore

Sandhya is a proactive educationalist. She conducts classes for CBSE, PUC, ICSE, I.B. and IGCSE. Having a 6-year experience in teaching, she connects with her students and provides tutoring as per their understanding. She mentors her students personally and strives them to achieve their goals with ease. Being an enthusiastic...

Read full article >

Meet Radhe Shyam Burman, an MBA Tutor from...

Radhe Shyam is a highly skilled accounts and finance trainer with 8 years of experience in teaching. Accounting is challenging for many students and that’s where Radhe Shyam’s expertise comes into play. He helps his students not only in understanding the subject but also advises them on how to overcome the fear of accounts...

Read full article >

Meet Urmila, an MBBS tutor from Bangalore

Urmila is a passionate teacher with over 8 years of experience in teaching. She is currently pursuing her Ph. D. She provides classes for Class 11, Class 12, MBBS and Medical tuition.  Urmila began her career in teaching long before she became a teacher. She used to provide classes for foreign national students in her college...

Read full article >

Find Class 12 Tuition near you
Class 12 Tuition in Delhi
Class 12 Tuition in Bangalore
Class 12 Tuition in Hyderabad
Class 12 Tuition in Kolkata
Class 12 Tuition in Mumbai
Class 12 Tuition in Chennai
Class 12 Tuition in Pune
Class 12 Tuition in Jaipur
Class 12 Tuition in Lucknow
Class 12 Tuition in Noida

Looking for Class 12 Tuition ?

Learn from the Best Tutors on UrbanPro

Are you a Tutor or Training Institute?

Join UrbanPro Today to find students near you
X

Looking for Class 12 Tuition Classes?

The best tutors for Class 12 Tuition Classes are on UrbanPro

  • Select the best Tutor
  • Book & Attend a Free Demo
  • Pay and start Learning

Take Class 12 Tuition with the Best Tutors

The best Tutors for Class 12 Tuition Classes are on UrbanPro

This website uses cookies

We use cookies to improve user experience. Choose what cookies you allow us to use. You can read more about our Cookie Policy in our Privacy Policy

Accept All
Decline All

UrbanPro.com is India's largest network of most trusted tutors and institutes. Over 55 lakh students rely on UrbanPro.com, to fulfill their learning requirements across 1,000+ categories. Using UrbanPro.com, parents, and students can compare multiple Tutors and Institutes and choose the one that best suits their requirements. More than 7.5 lakh verified Tutors and Institutes are helping millions of students every day and growing their tutoring business on UrbanPro.com. Whether you are looking for a tutor to learn mathematics, a German language trainer to brush up your German language skills or an institute to upgrade your IT skills, we have got the best selection of Tutors and Training Institutes for you. Read more

ThinkVidya Learning Pvt Ltd © 2010-2024All Rights Reserved