Question

What is a barter system? What are its drawbacks?

Answer 1

Barter System is a system of exchange in which one commodity is exchanged for another commodity.

Drawbacks of Barter Systems:

1. Lack of double coincidence of wants.

2. Lack of a common measure of value.

3. Indivisibility of certain goods.

4. Difficulty in making deferred payments.

5. Difficulty in storing value.