CHAPTER 2
Functions and Importance of Money
Money is used freely and widely in settlement of various economic transactions. Money has profound effects on jobs, incomes, and livelihoods and, hence, deserves greater understanding. People are so much accustomed to the use of money now that it is difficult to imagine a modern society without money. As such, this chapter explains various aspects of money.
Barter Economy
Before the advent of money, the activity of exchange was carried out through the barter system. In a barter economy, direct exchange was very common. Goods were usually exchanged with goods. The barter system of exchange worked well so long as human wants were simple and limited in number. However, in course of time, human wants multiplied, ...
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