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The Advantages of a Monetary System Over a Barter System
Barter   – goods and services were  traded without the exchange of money. However, before trade could occur, there had to ...
Or,  a heart surgeon might accept  only  certain goods  ( like  pineapples   )  but  not  others (  like  broccoli )  b ec...
. <ul><li>It is   less expensive   to use money. </li></ul><ul><li>Using money   saves time   and   time is   money . </li...
. <ul><li>Let’s say that I own a   pig .   If I   want to buy a   “jukebox” ,   I  don’t  want to trade the whole pig. </l...
<ul><li>So – I  have  to  negotiate  how much of the  </li></ul><ul><li>pig   I want to give up for the   jukebox . </li><...
<ul><li>This negotiation will   not be fast and easy . </li></ul><ul><li>I decide  on the   rear part of the pig   [ plus ...
“ Perhaps I Will  Not Miss This.” However I’m not ready to become a  pig angel just yet….. Because I would  miss my  girlf...
I get my chainsaw and do a little cutting .   “ Take that.” This is  not  “fast and easy” .   It  took time to  start  the...
<ul><li>Money is also   easier to tax .   </li></ul><ul><li>So a   monetary system  is better   than a   barter system . <...
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Advantages Of A Monetary System Over Barter

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Shows how inefficient a barter economy is compared to a monetary economy

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Transcript of "Advantages Of A Monetary System Over Barter"

  1. 1. The Advantages of a Monetary System Over a Barter System
  2. 2. Barter – goods and services were traded without the exchange of money. However, before trade could occur, there had to be a “double coincidence of wants” . E ach trader had to have something the other wanted. I’ll trade you a chicken for a pair of shoes. I would love to sell you these shoes but I can’t eat chicken, due to my bad teeth, caused by smoking. In a barter economy a chicken farmer who wants to buy shoes may have to first trade chickens for apples and then apples for shoes because the guy selling shoes wants only apples . Money eliminates this problem.
  3. 3. Or, a heart surgeon might accept only certain goods ( like pineapples ) but not others ( like broccoli ) b ecause he doesn’t like broccoli. You are lucky you are a pineapple farmer and not a broccoli farmer. I hate broccoli.
  4. 4. . <ul><li>It is less expensive to use money. </li></ul><ul><li>Using money saves time and time is money . </li></ul>The “calculation of exchange” by bartering is much slower than the “calculation of exchange” in a monetary system . It is less expensive to use money. The “calculation of exchange” is fast and easy because whatever the price is, you pay that amount. $2.00 Here’s $2.00 for one gallon.
  5. 5. . <ul><li>Let’s say that I own a pig . If I want to buy a “jukebox” , I don’t want to trade the whole pig. </li></ul>
  6. 6. <ul><li>So – I have to negotiate how much of the </li></ul><ul><li>pig I want to give up for the jukebox . </li></ul>
  7. 7. <ul><li>This negotiation will not be fast and easy . </li></ul><ul><li>I decide on the rear part of the pig [ plus the curly tail ]. </li></ul>I had to do some calculations on how much of the pig I wanted to give up.
  8. 8. “ Perhaps I Will Not Miss This.” However I’m not ready to become a pig angel just yet….. Because I would miss my girlfriend too much.
  9. 9. I get my chainsaw and do a little cutting . “ Take that.” This is not “fast and easy” . It took time to start the chain saw. There is also a clean up cost . In fact, this is “slow and hard” on both the pig – and me. OUCH …. You now know why some become vegetarians.
  10. 10. <ul><li>Money is also easier to tax . </li></ul><ul><li>So a monetary system is better than a barter system . </li></ul>T he m onetary system enables the “calculation of exchange” to go much faster.
  11. 11. Animationeconomics.com
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