What difference would it make to the economy if there were no money? What commodities might serve as money instead? Provide reasons for your answer.

First of all, I am saying that some of the companies will loose all of their workers, because their bosses won't have enough money.

Money performs three crucial functions in the global economy. Firstly, since money is a medium of exchange, individuals and businesses can price, buy, or sell goods and services produced all over the world. In the absence of money, we would still use the barter system, where it is very difficult to assign a specific value to goods and services. The problem of waiting for a double coincidence of wants, where two individuals exchange goods only when their needs are mutually satisfied, would make many transactions difficult.

Secondly, since money functions as a store of value, it adds to the purchasing power of individuals and businesses. People can save money and use it for future purchases. In the absence of money, people’s choices would be limited. In addition, purchasing power cannot exist in the absence of money since the barter system functions as a simple exchange of commodities.

Thirdly, money acts as a unit of account by providing a shared system for expressing the value applicable to all goods and services. In the absence of money, it would be very difficult to gauge and compare the value of a particular commodity with respect to the value of the commodity for which someone exchanges it.

If money did not exist, we would still use the commodities that people historically used as mediums for exchange. For instance, we might use cowry sells. We might use feathers, animal skins, large stones, metals such as bronze, silver, and gold, etc., which people used in place of money in the past. The choice of commodity to use in place of money would depend on how precious, rare, or valuable it is. The absence of money and a common medium of exchange would limit the extent of international trade between countries. Since money is an independent medium of exchange, it helped create the system of bank loans, credit, check deposits, online banking, etc. We would not have such facilities if we were still exchanging goods between ourselves based on mutual needs. It would be highly difficult to maintain a record of transactions in the absence of money. Since money is a value that we can record in our accounts, it is easier for us to conduct transactions.

This is the exact answer for PLATO!

the answer is a.

by: nicholas dooley