What is the Purpose of Currency?

Question

I mean couldn't we just get by through trading one thing for another thing? It just seems like an obstacle that gets in the way of getting what you want.

Answer 1

before the evolution of currency that was how itwas "barter Economy".do you want to turn the clock backwards?

Answer 2

Trading one thing for another is called barter, and if there is no currency, that is what you do. Now suppose that you are taking a vacation trip to (say) Nag's Head, North Carolina, and you want a place to spend the night. Do you want to carry a car full of stuff, in the hopes that the innkeeper will find something in your collection that he would like to have in exchange for a room, or would you prefer to pay cash and be done with it?

Answer 3

Trading one thing for another is barter. But it gets inconvenient when person A has something person B wants, but not vice versa. Some complex thing could sometimes be arranged where A trades to B to trade to C who trades to A so it all comes out even. But making a common item with an agreed upon value allows anyone to trade with anyone easily, not just those who directly can barter.

Answer 4

Trading (bartering) is fine, if you happen to have what your supplier wants/needs at the moment of your trade.

Most of time, it doesn't happen. So currency (money) is used as a method for "storing" the value of the trade. You can use it later, when the timing for your purchase (or sale) is more convenient.

As for "currency," most countries [theoretically] back the value of their issued currency with gold (and silver). Since it would be fairly unwieldy to carry around bricks of bullion (and making change would be a real challenge), currency is issued as a representative exchange mode for gold/silver value. We place our trust in that government to back the value and validity of its currency.

Answer 5

OK, I've thought about this one. If we traded for things then wouldn't it be a hassle just to go to the market, example: I will trade you this lawnmower for 3 months of groceries. It makes no sense, first of all, wouldn't it be easier to carry around $100 in you wallet rather than lead a cow around all day, then you may not know it's worth such as if I was to go to the storeand t said milk 3 chickens HOW MUCH IS A CHICKEN FOR CHEESES SAKE!!!!

Answer 6

Barter is cool
http://seattle.craigslist.org/bar/

A currency is a unit of exchange, facilitating the transfer of goods and services. It is a form of money, where money is defined as a medium of exchange (rather than a store of value). A currency zone is a country or region in which a specific currency is the dominant medium of exchange. To facilitate trade between currency zones, there are exchange rates i.e. prices at which currencies (and the goods and services of individual currency zones) can be exchanged against each other. Currencies can be classified as either floating currencies or fixed currencies based on their exchange rate regime. In common usage, currency sometimes refers to only paper money, as in "coins and currency", but this is misleading. Coins and paper money are both forms of currency.

Answer 7

Having money is an easier medium of exchange than bartering one good for another good because bartering requires both sides to have have a coincidence of wants, meaning A has to have apples and want bananas and B has to have bananas and wants apples in order for them to trade. And if there's is no coincidence of wants, then both sides wouldn't want to trade with one another and would try to trade with someone else or find another way to get what they want. So point is, money makes it easier for both sides to get what they want.

Answer 8

Old old days before money , relation between needer and seeder done by exchanging , you have apples you need meet , i have meet i need some apples so we trade ..
But that isn't much sufficient , so making coins was first to replace the goods , then developed into Coloured papers called money ..

So currency represents what you have (goods , effort done in work) transformed into money so seeder can give you what you want

Answer 9

Good question. It originally took the place of gold. So you wouldn't have to be burdened with carrying your gold nuggets around with you, you could carry notes saying you had so much gold in the bank. However, I don't think money represents gold evenly anymore.

But, that still leaves the question, why is gold so precious? Because of it's ease and ability to melt at a relatively low melting point and be able to mold and form and still hold its shape, it's ability to form alloys easily with other metals and, for its long lasting beauty without tarnishing.

Answer 10

To create a standard used for trading. If you have a pound of corn and you want a pair of shoes, how many pounds of corn is a pair of shoes worth? What about a pair of shoes for gallons of milk, cars, computer monitors, pounds of rice, etc.? You see what a huge problem this would cause as it would almost cripple every day commerce. Money is used to easily facilitate economic activity and commerce.

Answer 11

because currency is one thimg that is accepted universally what if you want to buy food but the person that has food does not want any of the crap you own then you are stuck but if you have somthing that is worth the same to everyone then it can be very easily "traded". Understand?