Resolution of Drawbacks of Barter System through Money:
(i) Medium of exchange – This is an important function of money which is also its identity. AID types of exchange take place through currency, as the quality of acceptability exists in money. Money is an ideal medium for conducting transactions in the market. This feature of money helped in overcoming the problem of double coincidence of wants of barter system.
(ii) Measure of value – This is another important function. Determination of price of a commodity is possible only through money. Exchange of goods and services becomes easy if their value is measured in terms of money. This feature of money helped in overcoming the problem of difficulty in measuring the value of goods that existed in the barter system.
