Question

The two basic ways to define money are

Answer 1

It is the transaction approach and the liquidity approach. Money serve as the medium exchange , store of value and value of a unit of a unit of account. Among these the medium of exchange is the most important one. Every transaction requires Money, before the invention of the money transactions are done through the barter system. But this system has many disadvantages such as the lack of double coincidence of wants.

Ans: Transaction approach and liquidity approach.