How can money easily exchange it for goods and services? Give exa… - Vidyadip

Question

How can money easily exchange it for goods and services? Give example to explain.

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Answer

Money can easily exchange it for good and services. The modern forms of currency like notes (or rupees), cheques or drafts are merely papers which are issued by the Reserve Bank of India on behalf of the central government.

Everyone prefers to receive payments in money and then exchange the money for things they want. For example, take the case of a blacksmith. He wants to sell tools in the market and buy rice. The blacksmith will first exchange tools that he has produced for money and then exchange the money for rice.

The transactions are made in money because a person holding money can easily exchange it for any commodity or service that he or she wants.

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