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In the modern economy, money is an essential and a basic necessity. The beginning of human civilization saw barter system where goods were exchanged for goods. Thus, many things such as clay, cowry shells, gold, paper, leather etc. were used to trade. The first difficulty in barter was to find two people whose disposable possessions mutually suit each other’s wants. For example - I may possess clothes and want to exchange them for leather. Here, the problem is to find a person who wants clothes and is ready to sell leather.
Money was described as anything which performed the following functions:
  • Serve as a medium of exchange
  • Serve as a common measure of value and
  • Serve as a store of value

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