How does money overcome the problems of barter system? Explain briefly

1.	How does money overcome the problems of barter system? Explain briefly.
Answer» Use of money overcomes the drawbacks of barter system of exchange in the following manner: (i) With the introduction of money, double coincidence of wants is no longer needed. (ii) Money facilitates storage of value which is difficult in barter system. (iii) Money facilitates satisfaction of wants even in smaller units which is not possible in barter system. (iv) Money serve as a medium of exchange. Accordingly, scope of exchange has greatly widened. Money overcomes the problem of barter system by replacing the C-C economy with monetary economy (where 'C stands for commodity). (i) Money as medium exchange solves problem of lack of double coincidence. (ii) Money as measure of value solves problem of absence of common measure. (iii) Money as store of value solves problem of storing wealth. (iv) Money as standard of deferred payment solves difficulty of borrowing and lending.

How does money overcome the problems of barter system? Explain briefly.

Answer»

Use of money overcomes the drawbacks of barter system of exchange in the following manner:

(i) With the introduction of money, double coincidence of wants is no longer needed.

(ii) Money facilitates storage of value which is difficult in barter system.

(iii) Money facilitates satisfaction of wants even in smaller units which is not possible in barter system.

(iv) Money serve as a medium of exchange. Accordingly, scope of exchange has greatly widened.

Money overcomes the problem of barter system by replacing the C-C economy with monetary economy (where 'C stands for commodity).

(i) Money as medium exchange solves problem of lack of double coincidence.

(ii) Money as measure of value solves problem of absence of common measure.

(iii) Money as store of value solves problem of storing wealth.

(iv) Money as standard of deferred payment solves difficulty of borrowing and lending.