Barter System and Its Drawbacks

The video tutorial explains the barter system, where goods are exchanged directly without money. It highlights the system's limitations, such as the need for a double coincidence of wants, lack of a common unit of value, challenges in future payments, and difficulties in storing and transferring value. These drawbacks led to the evolution of money, which provides a standard unit of account, facilitates future payments, and allows easy storage and transfer of value.

What is the primary concept of the Barter System?

• Exchange of services for money

• Exchange of goods for services

• Exchange of money for goods

• Exchange of one commodity for another

Why was the Barter System limited in its use?

• It was too modern

• It was too simple

• It was very difficult

• It was too expensive

What is the main problem associated with the Double Coincidence of Wants?

• Finding a common unit of value

• Transferring value over long distances

• Matching the wants and availability of two people

• Storing wealth in terms of commodities

In the Barter System, what must occur simultaneously for an exchange to happen?

• Sale and purchase

• Production and consumption

• Loan and repayment

• Storage and transfer

What is missing in the Barter System that makes it hard to measure the value of commodities?

• A future payment standard

• A transfer mechanism

• A storage facility

• A common unit of value

How does money solve the problem of valuing goods and services?

• By being universally accepted

• By being bulky

• By being difficult to transfer

• By being perishable

Why is it difficult to repay loans in the Barter System?

• Because of the lack of a standard for future payments

• Because of the lack of a common unit of value

• Because of the perishable nature of commodities

• Because of the difficulty in transferring value

What issue arises when repaying loans with commodities in the Barter System?

• The goods may be easy to store

• The goods may be universally accepted

• The goods may be too bulky

• The quality of goods may not be the same

Why is storing wealth in terms of foodgrains and cattle problematic?

• They are too modern

• They are perishable and expensive to store

• They are easy to transfer

• They are universally accepted

What makes transferring value difficult in the Barter System?

• The goods are universally accepted

• The goods are bulky

• The goods are too simple

• The goods are too modern