Why did the Barter System Fail?

The barter system, which was once the cornerstone of economic transactions, eventually fell out of favor due to its inherent limitations. The primary reasons for its failure are the challenges associated with the double coincidence of wants and the lack of a common measure of value. In a large, complex economy, such a system is simply not feasible. To understand this better, you can delve into theDifferent Types of Monetary Systems (Commodity, Commodity-Based, Fiat Money)through the provided link.

For a deeper understanding, consider the following resources:

Comprehensive Notes on the Indian Economy for UPSC Civil Service Exam
Understanding Monetary Policy – Objectives, Role, and Instruments

Related Study Materials
Exploring the Cashless Economy in India – Crucial Notes for UPSC GS-III	An Insight into The Reserve Bank of India: Its Functions and Composition
Understanding Money Supply in Economy – Types of Money, Monetary Aggregates, and Control Mechanisms	Distinguishing between Monetary Stimulus and Fiscal Stimulus
Inflation Targeting: Techniques, Potential Pitfalls, and Advantages	Understanding the Monetary Policy Committee (MPC) – Structure, Goals, and Essential UPSC Notes

Frequently Asked Questions

The barter system failed due to issues such as the double coincidence of wants and the inefficiency of barter in large economies.

What is the issue of double coincidence of wants?

The issue of double coincidence of wants refers to the condition where the two parties involved in the exchange must want what the other party has to offer.