Question

There is no common denomination under barter exchange to express the exchange ratios.
All commodities are not of equal value and there is absence of common measure of value.

• A. True
• B. False

Answer 1

The correct option is A True

Barter exchanges become extremely difficult in a large economy because of the high costs people would have to incur looking for suitable persons to exchange their surpluses. This is because there is an absence of common measure of value and no set ratios for exchange. Thus, an intermediate unit for exchange that is accepted by all is money, provides solutions for the issues associated with barter system of exchange.