Question

Why is paper money used as a medium of exchange across the world?

• A. Paper money is lightweight and easy to carry.
• B. Paper money can be stored and used later.
• C. Paper money can help in making future payments.
• D. Paper money can be a standard unit of measurement of the total value of goods.

Answer 1

Answer: (B), (C), (D)

Paper money can be a standard unit of measurement of the total value of goods.

Money acts as a store of value. It can be stored and used later. For example, coins can be stored for days and can be used to buy goods even after years. This helps people in making future payments. In other words, money acts as a standard for deferred payments. Money also acts as a unit of account, which signifies how money is a standard unit of measurement of the total value of goods. For example, 1 kilogramme of rice can be bought with 5 units of money, and 1 kilogramme of meat can be bought with 10 units of money.