Question

Which of the following are the drawbacks of barter system?

पर्याय

• Problem of double coincidence of wants

• Lack of common unit of value

• Difficulty in wealth storage

• All of the above

Answer 1

All of the above

Explanation:

The following are some of the disadvantages of the barter system:

1. Problem of double coincidence of wants
   For the trade to take place, the demands of two individuals should complement one other. In the example above, the second person will require rice in exchange for tea.
2. Lack of common unit of value
   There was no uniform unit for assessing the worth of one commodity in terms of the other for the purpose of trading in the barter system. In the instance of rice and horse exchange, a horse, for example, cannot be measured in terms of rice.
3. Difficulty in wealth storage
   Keeping goods for future exchange was extremely difficult. Perishable items such as cereals, milk, and meat could not be preserved for future exchange. As a result, wealth storage was a big challenge for the battery system.
4. Lack of standard of deferred payments
   In a C-C economy (barter system), future payments could not be paid since wealth could not be stored. It was quite tough to repay loans.