Explain the 'Medium of exchange' function of money. How has it so…

Question

Explain the 'Medium of exchange' function of money. How has it solved the related problem created by barter?

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Answer

Money serves as a medium of exchanging of goods and services. People sell goods for money and use the money for buying goods they want. It has removed the problem of double coincidence of wants faced in the barter system.

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Calculate Gross National Product at Factor Cost by,

Income method.
Expenditure method from the following data:

S.No.	Contents	₹ (in crore)
(i)	Net Domestic Capital Formation	500
(ii)	Compensation of Employees	1,850
(iii)	Consumption of Fixed Capital	100
(iv)	Government Final Consumption Expenditure	1,100
(v)	Private Final Consumption Expenditure	2,600
(vi)	Rent	400
(vii)	Dividend	200
(viii)	Interest	500
(ix)	Net Exports	(-)100
(x)	Profit	1,100
(xi)	Net Factor Income from Abroad	(-)50
(xii)	Net Indirect Taxes	250