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Question

Which of the following is not a problem of ‘commodity money’ when it acts as a medium of exchange?


  1. Expansion of trade

  2. Improper standardisation

  3. Difficult to store

  4. Indivisibility


Solution

The correct option is A

Expansion of trade


Expansion of trade is not a problem created by the use of commodity money when it acts as a medium of exchange. However, there are various problems such as improper standardisation, indivisibility, difficulty in storing, etc., which make this form of money an unsuitable medium of exchange.

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