Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:

It is difficult to carry forward one's wealth under the Barter system but the problem can be solved with money as.

(A) It is not perishable and storage costs are low.

(B) It can be solved as money is unit of account.

(C) It is acceptable to anyone at any point of time and acts as store of value.

(D) Rising pricing level may increase the purchasing power of money.

(E) It can be solved by the use of gold.

Choose the correct answer from the options given below :

Options:

(E) and (C) Only

(A) and (C) Only

(B) and (A) Only

(B) and (C) Only

Correct Answer:

(A) and (C) Only

Explanation:

The correct answer is option (2) : (A) and (C) Only

(A) It is not perishable and storage costs are low: This statement highlights one of the advantages of money — it is durable and can be stored easily, unlike perishable goods in a barter system. This helps in carrying forward wealth over time.

(B) It can be solved as money is unit of account: While this statement is true in terms of money being a unit of account (which facilitates pricing and valuation), it doesn't directly address the problem of carrying forward wealth under the barter system.

(C) It is acceptable to anyone at any point of time and acts as store of value: This statement correctly addresses that money is universally accepted and maintains its value over time, unlike some perishable goods or commodities in a barter system. This makes it a reliable way to store your wealth over time.

(D) Rising pricing level may increase the purchasing power of money: This statement talks about inflation dynamics and how it affects the purchasing power of money, which is not directly related to solving the problem of carrying forward wealth under barter.

(E) It can be solved by the use of gold: While historically gold has been used as money due to its durability and intrinsic value, this option is not universally applicable to all forms of money and doesn't directly address the advantages of money over barter in general terms.