Advantages
of Money
Advantages
of money include large scale production, variety of product, credit &
advance transactions, standard pricing, creation of markets, and saving &
investment.
1. Store Value
Money
can store value and this is one of the main advantages of money. It means you
can use money any time & money can help you in accumulation of wealth. It
is important to note that money value also falls with passage of time due to
inflation.
1. Large Scale Production
Large
scale production is only possible in monetary system. In barter system only
limited goods were produced to satisfy personal needs of producers. Monetary
system introduced the concept of large production for business.
2. Variety of Products
Monetary system made possible the
production of variety of goods. In barter system production of goods were based
on the daily needs, and there was no concept of luxury & artistic goods.
Goods were exchanges for those goods which have fundamental importance in the
routine life.
3. Credit Transactions
Monetary
system facilitates the credit transactions. In modern economy credit
transactions play fundamental role and all business receives credit and gives
credit. In barter system it was not the case, because goods were not a perfect
store of value and perishes with passage of time.
4. Standard Price
Monetary
system made it possible to determine the standard price of a product. In barter
system this standard pricing was not possible and it was a major limitation of
barter system. Concept does not work and exchange is based on the intensity of
demand.
5. Advance Payment
Monetary
system support advance payment concept, this concept was not possible in barter
system because goods cannot store value like money; there was not concept of
future transactions in barter system.
6. Saving & Investment
In
monetary system the concept of saving and investment works. In barter system
there is no concept of saving and investment of amounts saved. Barter system
was based on immediate consumption of goods.
