Unit 4 Ch 3 : Money and Credit — Social Studies STD 10 — Question

Lack Of Double Coincidence Of Wants: The direct exchange of one commodity for an other requires direct satisfaction of both the parties. So the main disadvantage of this system is the lack of double coincidence of wants. For example one cow would be exchanged for four sheep. It is necessary that a person with the cow should find the man who wants to exchange sheep with the cow. So arranging for such an exchange would be very difficult.

Lack Of Common Standard Of Value: All the goods which are be exchanged are not of the same value, so it is very difficult to determine the ratio of exchange between the different goods.

Lack Of Subdivision: In case of goods which are indivisible the value loss will be suffered. For example, if the owner of a cow wants to purchase a hen then it will be not possible for him to give a small part of cow to the owner of a hen. In this case he will suffer a loss.

The Difficulty In Strong Wealth: It is very difficult to store goods particularly perishable goods for a long period. They loose their value as time passes.

Difficulty For Future Payments: Under this system it is very inconvenient to lend goods to other people. With the lapse of time the value of goods may fall. So one would like to suffer a loss.