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11 Read the paragraph and answer the following questions. 4

Have you ever wondered why transactions are made in money? The reason is simple. A person
holding

money can easily exchange it for any commodity or service that he or she might want. Thus,
everyone prefers to receive payments in money and then exchange the money for things that
they want. Take the case of a shoe manufacturer. He wants to sell shoes in the market and buy
wheat. The shoe manufacturer will first exchange shoes that he has produced for money, and
then exchange the money for wheat.

Imagine how much more difficult it would be if the shoe manufacturer had to directly exchange
shoes for wheat without the use of money. He would have to look for a wheat growing farmer
who not only wants to sell wheat but also wants to buy the shoes in exchange. That is, both
parties have to agree to sell and buy each other’s commodities. This is known as double
coincidence of wants. What a person desire to sell is exactly what the other wishes to buy. In a
barter system where goods are directly exchanged without the use of money, double
coincidence of wants is an essential feature.

1.1. Why are transactions made in money? 2

Answer. Transactions are conducted using money because it serves as a universally accepted
medium of exchange. People prefer receiving payments in money because they can easily
exchange it for any goods or services they desire.

1.2 What does "double coincidence of wants" mean in the context of barter? 2

13 “The use of money spans a very large part of our everyday life.” Support the statement with 5
examples.

14 Explain the advantages a man having money with him over a man who has some goods for 5
purchasing anything.