Question

Explain the importance of money in an economy.

Answer 1

Money is an essential and basic necessity in a modern economy.

1.Money may not produce anything, but without it, nothing can be produced.

2.With the help of money, consumers make payment for goods and services.

3.With the help of money, producers can but raw material, plant and machinery. They can settle their debts and pay corporate taxes.

4:Money has contributed to economic growth all over the world because it has removed trade barriers.

5.With the help of money, government realises all taxes, fees, fines, penalties and other sources of public revenue.