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Explain modern and traditional form of money.
Money refers to the medium of exchange. Goods and services are exchanged or bought and sold in terms of money.
Traditional forms of money:
In earlier times, people used coins made of precious metals such as gold, silver and copper for the exchange of goods and services to satisfy their needs. Exchange of goods against goods was also used.
For example, grains were given as an exchange for cattle, milk was given in exchange for rice etc.,
Modern forms of money:
Types of modern money include:
a. Cash in the form of paper notes and coins.
b. Demand deposits – surplus money deposited in the bank, which people can withdraw any time as per their requirements.
c. Cheque – It is a paper used to instruct the bank to pay a specific amount mentioned on the cheque to the bearer or the account holder whose name is mentioned on the cheque by the person who holds the account in the bank.