Money As A Medium Of Exhange

Money As A Medium Of Exhange

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Storyboard Description

Money acts as an intermediate in the exchange process therefore it is called a medium of exhange.

Storyboard Text

  • Yes Lakshay. I will explain you about it while walking. Let's go.
  • Mom is there anything else that can replace money to buy goods and services?
  • In the ancient time barter system was used to exchange goods and services but it had many disadvantages because of which money was introduced in the society.
  • Beta in the barter system goods are directly exhanged without the use of money.
  • Mom what is this barter system?
  • In barter system both parties have to agree to sell and buy each others commodities.
  • Hi Sunita.  Can you give me bananas and in exchange I will give you these apples
  • Hi Aarti. I am sorry I cannot because I don't want apples.
  • This is called double coincidence of wants i.e, what a person desires to sell is exactly what the other wishes to buy. 
  • Okay mom.
  • It is so time consuming to search for someone who is willing to exchange these apples with bananas.
  • It is better to find a buyer for apples by exhanging these apples for money then I can purchase bananas or other commodity in the market with that money.
  • Money by providing the crucial intermediate step eliminates the need for double coincidence of wants.
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