Question

Q9. Describe the limitation of state exchange.

Answer 1

Answer:

Barter system was a system of exchange where goods were exchanged for goods and there was no common medium of exchange in the economy. Barter system had many drawbacks like lack of double coincidence of wants, lack of a common unit of value, difficulty of future payments or contractual payments and difficulty of storage of value and transfer of value.

Answer 2

Answer:

Drawbacks of Barter System

• In a large economy, Barter exchanges are not feasible.

Under the barter system, it is not feasible to carry forward one's wealth.

In a search for a person to exchange their surplus, in a barter system, a person would end up incurring very high costs.

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