Question

What is meant by barter exchange?

What is barter system of exchange?

Answer 1

Before money was invented, goods had to be exchanged for goods. This was the beginning of the barter system of exchange. The barter system refers to a system of exchange where goods and services are exchanged directly for other goods and services. For example, if a farmer produces wheat in excess of his own requirements, he may exchange it for some other good, say cloth, which he requires but does not produce himself.