Question

What is a barter system? List major difficulties of the barter system.

Answer 1

If we talk in simple terms then it is the the exchange system in which goods and services are exchange directly for other goods and services and they are used as money

The money here is acting as unit of account

This system was very famous in old times when agriculture was mostly done by many countries

Some of the major limitations of barter system are-

1. It has lack of common measure of value

2.It does not fulfill the criteria of money that is store of value

For example wheat, rice etc have very less durability

3.It is also having great difficulty in making the deffered payments

For example payment done in the future

4.In this exchange system it is very difficult to achieve the degree of specialisation