Question

Give reasons or explain the following statements :

The difficulties of barter system are removed by money. 

Answer 1

Barter system had many difficulties. such as problem of double coincidence of wants, lack of a common unit of value, difficulty in wealth storage and transfer of value and lack of standard of deferred payments. However, money helped in solving all these problems by performing various functios such as being a common measure of value, acting as a measure of exchange, acting as a store of value and being a standard of deferred payment.