Why was money the only source of transactions?

 

Money is not the only source of transactions, but it is widely used as a medium of exchange because it is a convenient and widely accepted form of payment. It also serves as a store of value and a unit of account, making it an efficient way to facilitate transactions between parties. Additionally, the use of money can facilitate trade and commerce by reducing the need for barter and the need to find a willing trade partner with goods or services that one desires.

There are several reasons why money has become the dominant form of exchange in most economies. One reason is that money is a durable and easily transportable medium of exchange, making it convenient for both buyers and sellers. Additionally, money is a widely accepted form of payment, meaning that it can be used to purchase goods and services from a wide range of merchants and providers. This increases the efficiency of transactions and allows for greater economic specialization and trade.

Another reason is that money can serve as a store of value, allowing individuals and businesses to save and invest for future purchases or investments. It also serves as a unit of account, providing a common denominator for pricing goods and services and making it easy to compare the relative value of different items.

Finally, money can also serve as a standard of deferred payment, meaning that it can be used to make purchases on credit or to pay off debts. This allows for greater flexibility in transactions, as individuals and businesses can purchase items now and pay for them later.

All these factors together make money a versatile tool that can help facilitate trade, commerce, and economic growth.


Some points to be remember

• Convenient and widely accepted form of payment

• Serves as a store of value and a unit of account

• Increases efficiency of transactions and allows for greater economic specialization and trade

• Durable and easily transportable medium of exchange

• Can serve as a standard of deferred payment

• Facilitates trade, commerce, and economic growth.


• Increases liquidity in the economy, allowing for easier and faster transactions

• Enables economic growth by allowing for investment and savings

• Facilitates price discovery and comparison

• Serves as a tool for monetary policy and a way for governments to control inflation and stabilize the economy

• Can act as a store of wealth and a hedge against inflation

• Can be used in digital forms and can be easily transferred and stored electronically, facilitating e-commerce and online transactions.