What are the disadvantages of the barter system?

One cannot carry forward the wealth in the barter system, an example would be one cannot store surplus rice for long periods of time as rice is a perishable item. Barter system is not feasible in large economies. You can read about the Monetary System – Types of Monetary System (Commodity, Commodity-Based, Fiat Money) in the given link.

Other disadvantages of the barter system are inability to make deferred payments, lack of common measure value, difficulty in storage of goods, lack of double coincidence of wants. Double coincidence of wants means, a person has to find the right person who is willing to not only purchase his goods but also has the goods to sell which is required. 

Further readings:

  1. Indian Economy Notes for UPSC Civil Service Exam
  2. Monetary Policy – Objectives, Role, Instruments 

Related Links

Cashless Economy in India – UPSC GS-III Notes

The Reserve Bank of India: Functions and Composition

Money Supply in Economy – Types of Money, Monetary Aggregates, Money Supply Control

Difference between Monetary Stimulus and Fiscal Stimulus

Inflation Targeting: Methods, Drawbacks and Benefits

Monetary Policy Committee (MPC) – Structure, Objectives UPSC Notes

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