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Tue, Sep

Removal of Barter System | Tax Collection

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Money has removed the inconveniences, difficulties and defects of barter system. The Barter System was vulnerable to many defects and difficulties in an economy but with The Barter System was vulnerable to many defects and difficulties in an economy but with Currency Money

The Barter System was vulnerable to many defects and difficulties in an economy but with Currency Money these problems were solved. Below are the benefits that people enjoy from Currency Money.

Double Coincidence Of Wants:

Money as medium of exchange has removed the double coincidence of wants. Under monetary system money is exchanged for goods and services when people buy things Goods and services are exchanged for money when people self things, there is no necessity for a double coincidence of wants in the presence of money.

A man with the wheat who wants to purchase oil, need not to find a person having oil and wants wheat. He can sell his wheat in the market for money and then purchase oil with the money thus obtained.

Common Measure Of Value:

Money has overcome the difficulty of common measure of value by acting as a standard of value. In a money economy the value of any commodity can easily be expressed in terms of money.

Store Of Value:

Money has removed the difficulty of store of value. Money is used to store the value (wealth) of goods and services. One can store one's earning in terms of money without any difficulty.

Future Payments:

Money has overcome the difficulty of future payments. Debts and future payments are stated in terms of money. There is no problem in receiving and making payments in future.

Sub Division:

Money has solved the problem of sub-division of commodities as money is easily divisible. With the help of money one can exchange individual commodity of great value for a commodity of less value. Money has made it possible to buy goods of both high and low value.

Transfer Of Value:

Money has made easy the transfer of wealth from one place to another place. A person can sell his immovable and movable property or things at one place and transfer his wealth to another place in terms of money.

Tax Collection:

Money has removed the difficulty of tax collection. Tax can easily be collected in the form of money. Government can easily utilize the revenue received for development and non-development purposes.

Capital Formation:

Money has encouraged the capital formation. One can easily store one's wealth in the form of money without suffering loss. Money has made-possible to save and has encouraged capital formation.



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