ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Goods were exchanged for food, tea, weapons, and spices. At times, human skulls were used as well. Salt was another popular item exchanged.

Detailed explanation-2: -Under the Barter system, it was difficult for the individuals to save, invest or accumulate wealth in terms of commodities. Money overcame this problem as it is neither a perishable commodity nor the value of money depreciates (negligible depreciation due to inflation). Therefore, money facilitates store of wealth.

Detailed explanation-3: -Money facilitates transactions of goods and services as a medium of exchange. Producers sell their goods to wholesalers in exchange of money. Wholesalers, in turn, sell their goods to the retailers and the retailers sell these goods to the consumers in exchange for money.

Detailed explanation-4: -Barter system is direct exchange of goods and services. It requires the double coincidence of wants. Barter system eliminates the use of money. It generally flourishes among uncivilized and backward communities. Barter system is possible where the area of exchange is limited. More items