Briefly describe the role of money in economic growth.

      

Briefly describe the role of money in economic growth.

  

Answers


Lellah
1. Accounting/Unit of Account
Money helps determine the terms of a given transaction. It sets a common bar of value, which every member of a society can agree upon.
2. Ease of Transaction
Because money can be used in any transaction, it makes agreements easier to reach. Otherwise, a potential buyer must find a specific object which the seller wants in order to make a trade.
3. Choice
Money permits a given customer to decide which goods or services work best for him. He may choose to give it in exchange for a particular good or service, or to withhold it and spend it on another good or service instead.
4. Credit Creation
Money facilitates the creation of credit, which allows trade to flourish in greater amounts.
5. Incentive
Money serves as an incentive to innovate in a market economy. It is a reward for working harder, building a better product or selling something more efficiently.
6. Store Of Value
To be acceptable, money must store value or, more specifically, purchasing power, because people receive money and spend it at different points in time. In other words, there is a difference between the time people receive money and the time they spend it.

Lellah answered the question on November 8, 2021 at 06:01


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