Answer :

Barter system is a system in which goods are exchange for goods. Suppose I have 1 kg of rice and I need 2 metres of cloth then I first need to find a person who will exchange the rice available with me with cloth. The major drawback of barter system is this double coincidence. The other drawbacks are – lack of common unit of value, store of value, and standard of deferred payments

These other disadvantages of barter system are being discussed below -


a) Lack of Common Measure of Value - The absence of a common unit of measurement to evaluate the goods for exchange makes proper accounting impossible.


b) Lack of Store of Value - In barter system it was not possible to store things for future because many of the goods are perishable in nature.


c) Lack of standard for deferred payments - In barter system it was not possible to make future payments or contractual payments.


Rate this question :

How useful is this solution?
We strive to provide quality solutions. Please rate us to serve you better.
Try our Mini CourseMaster Important Topics in 7 DaysLearn from IITians, NITians, Doctors & Academic Experts
Dedicated counsellor for each student
24X7 Doubt Resolution
Daily Report Card
Detailed Performance Evaluation
caricature
view all courses
RELATED QUESTIONS :

Explain how 'ReveEconomics - Board Papers

Explain the role Economics - Board Papers

Explain howEconomics - Board Papers

Explain theEconomics - Board Papers