In: Economics
1. The medium of exchange function of money eliminates:
A.
the opportunity cost of holding money.
B.
barter, or the exchange of goods for goods.
C.
the need for chequing accounts.
D.
the need for currency.
2. Barter requires the existence of:
A.
the backing of the government.
B.
the double coincidence of wants.
C.
paper currency and coins.
D.
gold or silver.
1) B.) barter, or the exchange of goods for goods.
Explanation: The medium of exchange
function of money eliminates: barter, or the exchange of
goods for goods. The exchange function of money makes it able to
eliminate the barter system, as it promotes efficiency of an
economy by minimizing time spent in exchange of goods and services.
It enables for smooth processing of buying and seling of
commodities on a monetary basis. It promotes specialization and
trade by efficient division of labour and productive efficiency. It
also eliminates the double coincidence of
wants.
2) B.) the double coincidence of wants.
Explanation: Barter
requires the existence of the double coincidence of wants.
Barter system is a medium of exchange of goods and services with
another goods and services directly without any medium of exchange.
Now, the double coincidence of wants refers to the system wherein
the needs of any two parties should be complemented for the
exchange to take place. Meaning the goods required & wanted by
one party is exchanged with goods required & needed by another
party. In this both the parties agree for selling and buying each
other goods.