ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Trading and bartering are two primary modes of payment in a traditional economy. Instead of using any currency as a mode of transaction, people depend on bartering or exchanging goods between themselves. This isn’t like a free market where companies can profit by selling products and services.

Detailed explanation-2: -Also known as a subsistence economy, a traditional economy is defined by bartering and trading.

Detailed explanation-3: -A barter economy is a cashless economic system in which services and goods are traded at negotiated rates. Barter-based economies are one of the earliest, predating monetary systems and even recorded history.

Detailed explanation-4: -In times of monetary crisis or collapse, a barter system is often established as a means to continue the trading of goods and services and to keep a country functioning. This may occur if physical money is simply not available, or if a country sees hyperinflation or a deflationary spiral.

Detailed explanation-5: -Definition. A traditional economy is a system that relies on customs, history, and time-honored believes. Tradition guides economic decisions such as production and distribution. Societies with traditional economies depend on agriculture, fishing, hunting, gathering, or some combination of them.