WRITE A 75 WORD RESPONSE
"An engine cannot run without oil. In the absence of money there were great difficulties in exchanging goods and services. This worked as an obstacle to the division of labor and specialization among various individuals and nations. By opening up the opportunities of effecting division of labor and through facilitating exchange and trade of goods and services money contributes to the expansion of production. Therefore, money enables the increase in the amount of production and variety of goods and services produced. So, if the modern economy is deprived of the money and relegated back to the barter system then the level of output would be much lower and the variety of goods and services much smaller than is enjoyed with a money system. Apart from this, money promotes savings because it is easier to save in terms of money than in terms of goods under the barter system. Thus money contributes towards the increase in saving and increase in saving leads to the increase in investment which determines the economic growth of the country. Thus, money lubricates the economy and helps in its optimum performance in terms of expansion and growth just as oil does an engine."
The present form of paper money or legal tender currency has large benefits . From ease of exchange of goods and services to division of labor and trade all have been facilitated due to money . Money supply affects production levels in an economy . The many drawbacks of barter such as double coincidence of wants , perishable money , difficulty in establishing standard exchange rate etc have all been removed by money . Money promotes store of value and ease of exchange unlike barter . This store of value through exchange facilitates future growth of the economy .
WRITE A 75 WORD RESPONSE "An engine cannot run without oil. In the absence of money...
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SPECIAL ARTICLES tole of Monetary Policy C Rangarajan What should be the objectives of monetary policy? Does the objective of price stability conflict with the goal of achieving...
ΤΕΧΝΙΤΗΤΗ iple Choice y the choice that best completes the statement or answers the question. The production possibilities frontier is a graph that shows the various combinations of output that an economy a. should produce. b. wants to produce. c. can produce d. demands 2 The price index was 320 in one year and 360 in the next year. What was the inflation rate? a. 9 percent ((B-A)/A)*100 b. 11.1 percent c. 12.5 percent ((360 - 320)/320)*100 d. 40 percent...
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Budgetary Policy and Economic Growth Errol D'Souza The share of capital expenditures in government expenditures has been slipping and the tax reforms have not yet improved the income...