Match the following: Chapter 11: Money Economics Solutions for Class 12 Commerce Economics

Chapter 11: Money

Economics Solutions for Class 12 Commerce Economics

Match the following:


Group A
Group B
1. Near Money
a. Sea Shells
2. Secondary function of money
b. Double coincidence of wants
3. Commodity Money 
c. Fiat money
4. Barter 
d. Measure of value
5. Legal tender
e. Bills of exchange  

f. Standard of deferred payments

g. Metallic money

Answer: 

Group A
Group B
1. Near Money
e. Bills of exchange  
2. Secondary function of money
f. Standard of deferred payment
3. Commodity Money 
a. Sea Shells
4. Barter 
b. Double coincidence of wants
5. Legal tender 
c. Fiat money

Explanations:

1. Anything which can be used as money or equivalent to money is called near money. Since bills of exchange can be used in the exchange of goods and services and can be converted into money at any point of time, they are an example of near money.

2. Standard of deferred payment is the secondary function of money. Standard of deferred payments means that money can be used to make future payments.  This implies that wealth in the form of money can be stored easily as a medium of exchange for future use.  

3. Sea shells are an example of commodity money as, in the initial stages of development, commodities like sea-shells, salt, gold or other precious commodities were used as money for the exchange of goods and services.

4. Double coincidence of wants is one of the drawbacks of barter system. It implies that the needs of any two individuals should complement each other for the exchange to take place. However, in reality, it is very difficult to find an individual who possess the goods and services that are needed by another individual at the same time to exchange what he/she has.

5. The currency issued by the monetary authority is known as legal tender money. It implies that the values of such currency notes and coins are backed by the monetary authority. Fiat money becomes the legal tender when it is backed by the monetary authority.

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