WORLD HISTORY

Detailed explanation-1: -The limitations of barter are often explained in terms of its inefficiencies in facilitating exchange in comparison to money. It is said that barter is ‘inefficient’ because: There needs to be a ‘double coincidence of wants’ For barter to occur between two parties, both parties need to have what the other wants.

Detailed explanation-2: -Barter is an alternative method of trading where goods and services are exchanged directly for one another without using money as an intermediary. For instance, a farmer may exchange a bushel of wheat for a pair of shoes from a shoemaker.

Detailed explanation-3: -A barter system is known as an old method of exchange. This system has been practised for centuries and long before money was introduced. People started exchanging services and goods for other services and goods in return.

Detailed explanation-4: -Barter vs Trade In a barter system, no money exchanges hands between the buyer and the seller. Trade, on the other hand, is a broader term which includes barter system, purchase of goods using money, international trade between countries, commodities trading, currency trading, stocks and bonds trading, etc.