write a short note on barter system its limitation , advantages and present situation ?

Barteris a system of exchange by whichgoodsorservicesare directly exchanged for other goods or services without using amedium of exchange, such asmoney.[1]It is distinguishable from gift economies in that thereciprocal exchangeis immediate and not delayed in time. It is usuallybilateral, but may bemultilateral(i.e., mediated through barter organizations) and usually exists parallel to monetary systems in most developed countries, though to a very limited extent. Barter usually replaces money as the method of exchange in times of monetary crisis, such as when thecurrencymay be either unstable (e.g.,hyperinflationordeflationary spiral) or simply unavailable for conducting commerce.

hope it helped u.. :):) :)

The limitations of barter

Barters' limits are usually explained in terms of its inefficiencies in easing exchange in comparison to the functions of money.

  • Need for presence of double coincidence of wants: For barter to occur between two people, both would need to have what the other wants.
  • Absence of common measure of value: In a monetary economy, money plays the role of a measure of value of all goods, so their values can be measured against each other; this role may be absent in a barter economy.
  • Indivisibility of certain goods: If a person wants to buy a certain amount of another's goods, but only has for payment one indivisible unit of another good which is worth more than what the person wants to obtain, a barter transaction cannot occur.
  • Lack of standards for deferred payments: This is related to the absence of a common measure of value, although if the debt is denominated in units of the good that will eventually be used in payment, it is not a problem.
  • Difficulty in storing wealth: If a society relies exclusively on perishable goods, storing wealth for the future may be impractical. However, some barter economies rely on durable goods like pigs or cattle for this purpose.
The advantages of barter
  • Direct barter does not require payment in money (when money is in short supply) hence will be utilized when there is little information about the credit worthiness of trade partners or there is a lack of trust.
  • The poor cannot afford to store their small supply of wealth in money, especially in situations where money devalues quickly

  • 11

Barter is a system of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.[1] It is distinguishable from gift economies in that the reciprocal exchange is immediate and not delayed in time. It is usually bilateral, but may be multilateral (i.e., mediated through barter organizations) and usually exists parallel to monetary systems in most developed countries, though to a very limited extent.

  • 6

  • Absence of common measure of value: In a monetary economy,money plays the role of a measure of value of all goods, so their values can be measured against each other; this role may be absent in a barter economy.
  • Indivisibility of certain goods: If a person wants to buy a certain amount of anothers goods, but only has forpayment one indivisible unit of another good which is worth more than what the person wants to obtain, a barter transaction cannot occur.
  • Lack of standards for deferred payments: This is related to the absence of a common measure of value, although if the debtis denominated in units of the good that will eventually be used in payment, it is not a problem.
  • Difficulty in storing wealth: If a society relies exclusively on perishable goods, storing wealth for the future may be impractical. However, some barter economies rely on durable goods like pigs or cattle for this purpose
  • 3
What are you looking for?