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GCE Economics 1989 Question 3

Question 3

Money and Inflation

The greatest disadvantage of the barter system is the need for

  1. A.durability
  2. B.divisibility
  3. C.homogeneity
  4. D.double coincidence of wants
  5. E.portability.
Show the answer and explanation

Answer: D (double coincidence of wants)

Explanation

In barter each trader must find someone who has what he wants and wants what he has – the double coincidence of wants – which is very hard.