ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Long before money was invented, when people needed things they did not have, they exchanged their goods and services with others for their goods and services in return . We call it the Barter system. Q. Barter system made it difficult for people to find what they needed and to exchange the same with what they had.

Detailed explanation-2: -Which of the following is true about bartering? It involves the exchange of goods or services.

Detailed explanation-3: -In ancient times, trade began as a barter system in which people exchanged one object for another. Prehistoric humans traded animal skins or services for food. Over time, coins and currencies began to emerge. Some primitive societies used shells or pearls as currency.

Detailed explanation-4: -Barter is an act of trading goods or services between two or more parties without the use of money-or a monetary medium, such as a credit card. In essence, bartering involves the provision of one good or service by one party in return for another good or service from another party.

Detailed explanation-5: -Money became a medium of exchange for goods and services, displacing the barter system. Under the barter system, the transacting parties must have a demand for the goods or services each offers to facilitate the transaction. If needs are mismatched, no exchange takes place, leaving parties unfulfilled.