1
Question
Introduction of money has separated the acts of 'sale' and 'purchase'. How?
Introduction of money has separated the acts of 'sale' and 'purchase'. How?
Open in App
Solution
Under the barter system of exchange, acts of sale and purchase of an individual must occur at the same point in time. To buy a commodity, an individual must sell something which is demanded by the other person, at the same time. Also, sale and purchase by an individual must be equal in value.
With the introduction of money (as a medium of exchange), an individual can buy a commodity with money without selling anything at the same time. Likewise, he can sell a commodity for money without buying anything at the same time. Thus, with the introduction of money, acts of sale and purchase have been separated.
Under the barter system of exchange, acts of sale and purchase of an individual must occur at the same point in time. To buy a commodity, an individual must sell something which is demanded by the other person, at the same time. Also, sale and purchase by an individual must be equal in value.
With the introduction of money (as a medium of exchange), an individual can buy a commodity with money without selling anything at the same time. Likewise, he can sell a commodity for money without buying anything at the same time. Thus, with the introduction of money, acts of sale and purchase have been separated.
Suggest Corrections
9
Similar questions