Question

Describe the difficulties of barter system.

Answer 1

The system of barter was prevent in the olden day, practically people have to face many difficulties in this system.

• Absence Of Double Coincidence : The double coincidence of need means that the need should match the other. But it is only a coincidence that one's needs match.
• Lack Of Common Measure Of value : The difficulty of barter related to the measurement of value. There was a universal measure with the help of which all kinds of goods and services could be measured.
• Lack Of Value Accumulation : The barter system had the inconvenience of storing the goods produced by the people. Man produce some perishable goods. It was difficult to store such a thing for a long time.
• Lack Of Co-division : There are some things whose division is not possible, If it is divided, then its usefulness is lost. If four things are to be taken in exchange for a cow which are in possession of different persons, in such a situation cutting the cow into piece destroys the usefulness of the cow.
• The Difficulty Of Future Payments : There was the difficulty of lending in barter system. In this system the lender made a loss and the borrower got profits.