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Question 20 of 20

One of the main features of the barter system is that it:

A. requires all of its money to serve as tokens for goods.
B. makes trade possible without money.
C. allows the government to control the money supply.
D. uses a variety of different currencies at once.

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GinnyAnsweridn

Final answer:

The barter system enables trade without money, while money functions as a vital medium of exchange, providing solutions to the limitations of bartering.


Explanation:

One of the main features of the barter system is that it makes trade possible without money. In a barter system, goods or services are directly exchanged for other goods or services without using money as a medium of exchange. This feature highlights the essence of bartering as a trading system that predates the use of currency.

Barter systems have their limitations, such as the need for a double coincidence of wants, absence of a common measure of value, indivisibility of certain goods, and more. Despite these limitations, barter can still be useful in specific scenarios like when traditional currency is unstable or unavailable for transactions.

Money, on the other hand, serves as a medium of exchange, unit of account, store of value, and standard of deferred payment, addressing many of the challenges posed by the barter system. Its functions enhance economic transactions and enable smoother trade in modern economies.


Learn more about Barter System and Money here:

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