How is using money related to bartering?

Answer 1

If by the barter system, you mean the system of trading goods and services that existed prior to the introduction of money, the barter system is almost completely replaced when money is introduced. An easier flow of goods and Specialization are the immediate changes to the economy that come with the introduction of money.

Money tends to be very durable, very portable, and easily divisible.

Most goods are not all three, and often have only one of these characteristics.

Divisibility of Milk vs Portability of Plow

Money reduces barriers to trade. For example, if a blacksmith has a hankering for a gallon of milk, and the farmer wants a new plow, there is a mismatch of value, the blacksmith only wants a gallon of milk, the plow will take a lot of time to make, require a lot of metal and fuel for the forge -- not to mention the wear and tear on his equipment, he'd need 100 gallons for that trade, but he only wants one. This mismatch in value is common in the barter system, and slow down the marketplace.

Durability of Money to Save vs Milk Grain and Nails

Money also makes it easier for savers to pool their investments in new business types which previously couldn't work in the barter model. Imagine several farmers and the blacksmith save cash up over ten years, and buy a bunch of specialized wagons that can carry a lot of goods from farm or factory to market, they then get the return on this investment as they further specialize the economy creating the job of teamster (later unionized :) ) these owners pay the teamster to maintain the wagons and horses and carry goods back and forth, this gives the farmer and the merchant more time to do what they have specialized in.

Benefits of specialization

So money pushes participants in the economy to specialize, merchants who buy raw food goods from different suppliers sell them at market for money, farmers, and milkers get cash for raw goods and a new occupation is born, the goods merchant. Now people have a place to come for goods, a store, which seeks ever new products to sell. As the farmer has more time (he now sells his milk product all at once when he arrives at the market) he has more time to work his farm, he discovers new ways to yield more goods with the same property, maybe he starts to raise fish in his pond, or he starts writing books.

Money is often easier to steal than goods, and services. This creates new category of occupation, highwayman and banker. People don't want to have their savings vulnerable to theft, so they need a safe place to store it, a vault in a bank is perfect. But this means people who are moving money around need to have carts to deliver the money to the bank, this creates the job of highwayman, and pirate, which creates the need for private security contractors and royal navies. and so on. Once you have bankers you can finance ever more complicated industries that could never be built out of the wealth of one person, although they may start smaller that way-- think airlines, aircraft manufacturers, and automobile makers -- without access to credit from banks they could not afford the capital outlays required to build modern aircraft and cars.

Money makes the world go round, the world go round, the world go round!

Answer 2

Barter system of trade was exchange of goods by bargain or estimates of the value goods in quality/quantity by the buyer/seller mutual agreement directly for one another.

The money system replaced barter trade as medium of exchange and fulfilled the double coincidence of want to selectivity by choice.

Money became a measure of unit value.It became a standa.rd deffered payment.It had store value & liquidity

Answer 3

by hand