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Money and Banking — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsMoney and Banking4 Marks
Question
Describe the evolution of money.
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Answer

Evolution of money:Money is anything that can serve as a medium of exchange. All types of things like animals, agricultural produce, metals had been used as a medium for exchange. The commodities served well as long as the volume of trade was small. Later on metals like gold and silver were used as money. They were durable, they could be divided into monetary units and they were limited in supply. The inconvenience of metals in handling large transactions, lack of safety during transportation, etc. Were the main problems faced. This lead to use of paper currency as a medium of exchange. With further increase in volume of transactions bank money in the form of Cheques, Credit Cards, etc. is now also used as money.

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