Money, Inflation, and Barter System Quiz

Introduction

Money and Inflation

3.1 Meaning of a Barter System

3.1.1 Limitations of a Barter System

3.1.1.1 Problem of Mutual Adjustment of Wants

3.1.1.2 Difficulty in Storing of Value

3.1.1.3 Problem of Measurement of Value

3.2 Origin and Development of the Concept of Money

3.3 Meaning of Money and Functions of Money

3.3.1 Money as a Medium of Exchange

3.3.2 Money as a Store of Value

3.3.3 Money as a Measure of Value

3.4 Types of Money

3.5 Meaning of Inflation

3.6 Definition of Inflation

3.7 Characteristics of Inflation

3.8 Causes of Inflation

3.8.1 Increase in Demand

3.8.2 Increase in Cost of Production

3.8.3 Other Reasons

3.1.1 Limitations of a Barter System: In the earlier years, individuals lived a simple village life, had less needs and carried out agricultural exchange, exchange of goods and service which was sufficient for their sustenance. For example a farmer cultivating wheat would store the required stock, and would exchange the remaining wheat to get rice, clothes or shoes. Similarly the shoe- maker would get clothes and food, ghee by exchanging the shoes he made. Teachers used to get food in exchange for knowledge and the artists would be patronized for their entertaining art.

Increasing population and socio-economic development resulted in an increase and change in demands, making them more specific. Industrialization, Urbanization, division of labour, and Specialization made the Barter system limited and less applicable. The mutual exchanges decreased and the personal needs increased.

The prominent limitations of barter system are:

3.1.1.1 Problem of Mutual Adjustment of Wants: With socio-economic development, the

needs of human beings increased and so the economic structure which was simpler in earlier times