Question

How does money solve the problem of lack a common measure of value that existed under the barter system?

Answer 1

Money solves the problem of the lack of a common measure of value in the barter system by providing a standard unit that is universally accepted. In the barter system, people had to directly exchange goods, making it hard to compare value, like how many onions are equal to a piece of cloth. With money, the value of goods is measured in a consistent unit, making it easy to compare and trade anything. This simplifies transactions and ensures fairness in exchange.