CONCEPT OF :MONEY & :BANKING
Indian Economy. MONEY AND ITS FUNCTIONS: In earlier times, economic transactions used to happen as barter exchanges i.e. one commodity is exchanged for the other commodity. But for barter exchanges to happen there must be double coincidence of wants i.e. there should be diametrically opposite demand of the two parties doing the exchange. Consider, for example, an individual has a surplus of rice which he wishes to exchange for wheat. If he is not lucky enough, he may not be able to find another person who has the diametrically opposite demand for rice with a surplus of wheat to offer in exchange. The process can become very cumbersome in case of a large economy. To smoothen the transaction, an intermediate "commodity" is necessary which is acceptable to both the parties. The individuals can then sell their produce for this commodity and use this commodity to purchase the other goods that they need. Now what should be the characteris...