How does money overcome the problems of barter system?

cbse-class-12

#1

How does money overcome the problems of barter system? Explain briefly.


#2

Money overcomes the problem of barter system by replacing the C-C economy with monetary economy (where 'C stands for commodity).
(i) In the barter system, there was a problem of double coincidence of wants. It was very difficult to match the expectations of two different individuals. Thus, money was invented to overcome the problem of double . coincidence of wants.
(ii) When there was no money, it was difficult to give common unit of value to goods or commodities, but when money was evolved, it gave a common unit of value to every goods and services.
(iii) Money facilitates the contractual future payments which were impossible at the time of barter system.