Which of the following statement/statements are true?
Statement 1: Economic exchanges without the mediation of money are known as barter exchanges.
Statement 2: Barter exchanges presume the double coincidence of wants.
Answer & explanation
Correct answer: option 1
The correct answer is option 1: Both the statements are true
Explanation:
- Statement 1 is true because barter exchanges involve trading goods and services directly without using money.
- Statement 2 is true because barter exchanges do require the double coincidence of wants, meaning both parties must want what the other is offering in order to complete the exchange.Consider, for example, an individual who has a surplus of rice which she wishes to exchange for clothing. She needs to find another person who has the diametrically opposite demand for rice with a surplus of clothing to offer in exchange.