Advantages of Barter System

Advantages of Barter System

Following are the important advantages of barter system.

1.    Inflation is only Monetary System

Inflation is something related with the monetary system. There is not general rise in price in barter system, it is important to remember that in barter system , there is no pricing mechanism exit, accordingly there is not phenomena of inflation.

2.    Equal Opportunity for Growth

Barter system supports the equal distribution of income. In barter system, everyone has fair chance of growth; production mainly depends on personal effort & skills. Therefore a person who will put more effort will earn more.

3.    Economic Stability is ensured

There is not trade cycle exists in barter system, and this system operates in a smooth way all the time, because this system is based on essential demand.

4.    Artificial Shortages are discouraged

in barter system producer is not in a position to create shortages, because there is no price mechanism is in place, therefore shortages cannot raise the prices, which is one of the primary cause of artificial shortages.

5.    Large Production not recommended

In barter system demand is the most important factor of producing the goods. Due to limitation of storage facility, producer strictly produces the goods as per real demand in the market.