Question

Which of the following justifies the need of money over the barter system?

• A. Double coincidence of wants
• B. Meeting new people
• C. Different values of commodities
• D. People incurring losses

Answer 1

Answer: (A), (C)

Different values of commodities

The barter system was the process of exchanging goods without an intermediate. However, since the values of goods and services were different, they could not always be exchanged. The invention of money as a medium of exchange eliminated these drawbacks. Money replaced the barter system and eliminated the need for double coincidence of wants.