Question

Functions of money and barter

Answer 1

Solution :

When the people of this economy trades three of their goods, the price of the good must list 1 price and then the economy requires 3 prices for the people to carry transactions.

Suppose the number of the goods that people trade increases to 15 number, then the price of the goods must list one price and the number of the price that the economy requires increases to 15.

Money has an intrinsic value and it is the unit of account, while that of the currency is the measure of the value and have a purchasing power that government is bestowed on it being a legal tender.

The store of the value characteristics is negatively impacted. But because the ongoing increase in the cost of the standard implies inflation that means that the value of the assets as accounted by the store has a value function as the money decreases.

Even when the cost of the living increases, the money serves as the best medium of exchange and a unit of the account.

Double coincidence of the wants is the barter system that is required.