Podcast
Play an AI-generated podcast conversation about this lesson
Questions and Answers
Which of the following is a disadvantage of the barter system?
Which of the following is a disadvantage of the barter system?
- No danger of fake currency
- Storage of perishable commodity is a loss of value (correct)
- No need to carry for Rs.2/- exchange
- Easy for trade
What does the money system encourage compared to the barter system?
What does the money system encourage compared to the barter system?
- Increased transaction costs
- Specialization in division of labour (correct)
- Double coincidence of wants
- Higher search costs
Which one of the following is NOT a primary function of money?
Which one of the following is NOT a primary function of money?
- Search cost reduction (correct)
- Measure of value
- Medium of exchange
- Transferable and acceptable
Which aspect of the barter system directly relates to the inconvenience of finding trade partners?
Which aspect of the barter system directly relates to the inconvenience of finding trade partners?
Signup and view all the answers
Which characteristic makes money effective in measuring the value of labour, capital, land, and other economic measures?
Which characteristic makes money effective in measuring the value of labour, capital, land, and other economic measures?
Signup and view all the answers
Study Notes
Barter System
- No risk of counterfeit currency
- Easy to trade with no need for small change (e.g., Rs.2/-)
- Requires double coincidence of wants, meaning both parties must have what the other wants
- Involves high search costs and transaction costs
- Storage of perishable goods can lead to loss of value
Money System
- Encourages specialization and division of labor
- Allows for measurement of value of labor, capital, land, and goods
- Enables easy transfer and transportation of value
- Is divisible, meaning it can be divided into smaller units
- Is fungible, meaning each unit is interchangeable with another
Primary Functions of Money
- Measures value, making it a standard unit of account
- Acts as a medium of exchange, facilitating transactions and trade
- Is widely accepted, making it a convenient store of value
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
This quiz covers the pros and cons of the barter system and how it differs from the money system in economics. Learn about the advantages and disadvantages of each system.
