Question

Explain how money encourages specialization, and how specialization improves everyone's standard of living.

Answer 1

Specialization improves the  standard of living of each and every member of a society because if the number of  people who specialize  in certain areas increase they  will be able to innovate new things which will make life easier for all the people.

Explanation:

Money helps in improving specialization because it is with the help of money only  we can import and export to other countries.

Lets take an example :Suppose China  specializes in making cheap Plastic products it is only possible through the usage of appropriate machinery required for the production of Plastic items.China needs to import the machinery from USA for that it needs money and if china has money it can use the money to buy those machinery .Thus we can say that specialization is linked with money.

Now ,another aspect of the question is that as a country specializes in production of a particular item /product ,its exports will increase .The demand for its product will increase ,so more income is coming from outside the company,thus the standard of living of the people also improves with specialization.