Transaction Costs (Photo credit: hjl)
By Matthew Melchiorre – Money expedites trade between individuals by dramatically reducing transaction costs. By denominating the value of a chair, apple, etc. in easily portable units that everyone accepts, a buyer of one person’s supply need not be the supplier of the same person’s demand. The carpenter and apple grower can now spend more time making chairs and picking apples and less time finding mutually beneficial transactions.
More money doesn’t make everyone richer; more production does. The carpenter and apple grower don’t want money per se, but the value of their products that money represents. more> http://tinyurl.com/b8pxggv
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