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in Economics by (45 points)
Explain barter system and its most important features

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Barter System is that system in which goods are exchanged for goods. In  ancient times when money was not invented trade as a whole was on barter  system. This was possible only in a simple economy but after the  development of economy, direct exchange of goods without the use of  money, was not without defects.

The important features of barter system are as under: 

  1.  Barter system is direct exchange of goods and services.
  2. It requires the double coincidence of wants. 
  3. Barter system eliminates the use of money. 
  4. It generally flourishes among uncivilized and backward communities. 
  5. It is possible only if the wants of members of a community are very limited.
  6. Barter system is possible where the area of exchange is limited. 
  7. It is possible where the ratio of exchange between two commodities are determined. 
  8. It is now used in the modern foreign trade because of having good impact on balance of payment of trading countries.

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