Barter system makes the exchange process very difficult and highly inefficient. Money has overcome the drawbacks of barter system in the following manner:
1. Medium of Exchange:
As a medium of exchange, money has removed the major difficulty of lack of double coincidence of wants in barter system. It separates the acts of sale and purchase of goods and services and helps both the parties in obtaining maximum satisfaction. A buyer can buy goods through money and a seller can sell goods for money.
2. Measure of value:
Under Barter system Swap Products
, different goods were of different values and there was no common denomination to express their exchange ratios. But, money is the measuring rod which expresses the value of other commodities. It becomes easier to compare the relative values of any two commodities.
3. Store of Value:
Under Barter system, it is very difficult to store goods for future use. Most of the goods are perishable and their storage requires huge space and transportation cost. But, money can be easily stored for future use. It is the most convenient and economical means of storing earnings and wealth. It has the merit of general acceptability and its value remains stable as compared to other goods.
4. Standard of deferred payments:
Barter system lacks suitable standard of deferred payments which creates difficulty in credit transactions. Borrower may not be able to arrange goods of exactly the same quality at the time of repayment. On the other hand, due to general acceptability of money, future payments are expressed in terms of money. Money has simplified the borrowing and lending operations and encouraged capital formation.
Money is demanded for three motives:
(a) Transaction Motive
(b) Precautionary Motive
(c) Speculative Motive
The Mool-mantra of this concept is to wipe-out the liquidity crisis that we currently face by helping you ‘Trade, Swap, Replace ANYTHING”. Your posts on this website would be absolutely free and even you strike a deal on your own. we don’t want a penny out of it.