ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What would be the main disadvantage of using shells as money instead of coins? It does not have uniformity because not all shells are the same size or value.

Detailed explanation-2: -Answer and Explanation: The main disadvantage of using shells as money, instead of coins, would be a lack of uniformity. Coins possess uniformity, which is not the case with shells as they are of different shapes and sizes.

Detailed explanation-3: -The Value of Money Can Be Inflated Away Over time, the price of goods tends to increase. A dollar next year won’t purchase as much as a dollar today. This process is known as inflation. If value is stored as money, then the value can decrease over time, writes Forbes.

Detailed explanation-4: -But when traders arrived from India, they would not sell their goods for cowrie shells because such shells were abundant in India. To Indians, cowrie shells were worthless.

Detailed explanation-5: -Disadvantages of Money as a Medium of Exchange The value of money as a medium of exchange fluctuates owing to inflation. Because of inflation’s impact on the “time value of money, ” a dollar’s purchasing power diminishes over time.