Non-Monetary Exchanges refer to the goods and services produced but not exchanged through money like the domestic services rendered by the members of a family to each other. The value of these services is many a time difficult to estimate and so it escapes national income estimation. These exchanges, however, have a positive effect on the welfare of the people.
Detailed Answer:
These are the activities which are not measured in monetary term.
Non-Monetary transactions are quite evident in rural areas where payments for farm labor are often made in kind rather than cash.
Impact: As these activities are not included in GDP, so GDP remains underestimated. Thus, non-monetary exchanges make GDP an inappropriate index of welfare.
