Home › Karnataka PUC II › Economics › Money and Banking › Why does the chapter describe a barter system as…
Why does the chapter describe a barter system as suffering from the 'double coincidence of wants'?
ABoth parties must agree on the price simultaneously
BEach party in the trade must want exactly what the other has to offer
CTwo governments must agree on currency
DTwo banks must be willing to clear a transaction
Answer & Solution
Correct answer: B. Each party in the trade must want exactly what the other has to offer
Double coincidence of wants: A has X and wants Y, AND B has Y and wants X. Such pairings are rare; money eliminates this search problem by being universally acceptable.
Related questions
A bank turns deposits into loans instead of merely storing them. In doing so it acts as anThe central bank of the United States, which regulates banks and runs monetary policy, is Across a whole banking system, the amount of money that can be created is worked out with When banks hold only the minimum reserves required, or barely more, the situation is calleIn a mortgaged house, the home itself is the asset, while the mortgage is the:Subtracting what is owed from the value of the assets gives the:On that layout, liabilities are shown on the right and assets on the:Because of its two-column shape, that statement is often nicknamed a: