The existence of money makes trader easier. How is it that money can also increase the standard of living?
There was a barter system before the introduction of money, in which people used to trade goods and services directly in exchange for other goods and services. There was no means of trade involved in that method. But this scheme does have its drawbacks. For example, if a local blacksmith wants two loaves of bread, but if the baker requires plumbing services for her horse instead of new shoes, the blacksmith must find a plumber who needs new instruments to make the trade. The currency system has removed certain restrictions. Instead of directly exchanging goods and services by barter, this included an agreed-upon form of paper or coin money as an exchange mechanism. Governments developed paper notes and coins that facilitated trade with the growth of the currency system in economies. The presence of money thus made it easier to exchange.
Step by step
Solved in 2 steps
