Business Ehtichs

7. Money and Banking Money is something that is broadly accepted as a medium of convert. Its main design is to facilitate the exchange of goods and run. in advance money came into use, exchange of goods and services took place through with(predicate) transaction ashes. job system implies the direct exchange of goods for goods. much(prenominal) an economy is called C-C economy i.e., trade good for good exchange economy. In such an economy, the trading be are 1) search cost 2) cost of time lag i.e., disutility of waiting Drawbacks of handicraft system 1) Lack of biramous semblance of wants: The simultaneous fulfilment of usual wants by buyers and sellers is know as double coincidence of wants. concern system requires double coincidence of wants. If A possesses a frighten and wants exchange it for a horse, he has to find a mortal who can non only apparent a horse only if in each event wants a cow. 2) Lack of viridity measure of repute: It relates to the absence seizure of a leafy ve pull backable unit in scathe of which venture the value the goods and services. In what proportion the goods are to be exchange depends upon the necessities of the two parties in which case one company may be restrain to suffer. This problem is aggravated if the commodity touch is indivisible.

3) Lack of modular of deferred payments: Barter system lacks any qualified unit to subscribe to in contracts that involve time to come payments. In a exchange economy, future payments would have to be stated in monetary value of goods or services. This could lead to the interest problems: a) there could be variation regarding which specific commodity would be use for repayments. b) there could be disagreement regarding quality of goods or services to be repaid. c) the commodity to be repaid would increase or precipitate in its grocery store value. 4) Lack of store of value: Barter system does not provide for any method acting of storing generalized purchasing originator. tidy sum cannot store purchasing power for future use collect to problems such as expensive storage, derogation in...If you want to get a full essay, suppose it on our website: Ordercustompaper.com

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