Economics Today and Tomorrow, Student Edition
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN: 9780078747663
Author: McGraw-Hill
Publisher: Glencoe/McGraw-Hill School Pub Co
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Chapter 14, Problem 20AA
To determine

To ascertain:The costs and benefits of using the barter or money system.

Expert Solution & Answer
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Explanation of Solution

    Costs Benefits
    Barter The problem is measuring the values that arise. For example, if a person wants 1 cow against 2 goats. But another person wants 5 goats against one cow. Thus, the problem of measuring the commodity arises.There are no issues in the barter system about export and import trading, such as the recession in foreign exchange and adverse balance of payments. Demand is satisfied with the domestically produced.
    Money The issue with money is that its value does not remain constant which creates economic instability. Too much money is cutting its value and causing inflation.Money's principal advantage over barter is that money will still be available. Frequently, barter is not necessary. This is due to the need for what is termed a coincidence of wanting sometimes called a double coincidence of wanting.

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