What is money and barter system of exchange?

Money

Money is can be anything which is generally accepted by people as mediam of exchange, measure of value, store of value and standard of deferred payment.

What if there were no money?

There were a time when there was no money. At that time people exchange goods for goods that  that system of money was known as barter system of exchange.

Deficulty faced by barter system of exchange 

• Double coincidence of want:-This was the biggest problem faced  by barter system of exchange because in barter system of exchange we need to have what other want then only we can have what we want.

For example:suppose  If we want rice and we have milk but there is no one who want milk and willing to give rice for that. This situation was problematic in barter system.

• Lack of measure of value:-This was also a big problem in this system. Under barter system of exchange we cannot measure the value of any good but now with the help of money we can measure the value of any good.

• Lack of store of value:- As we all know not every good can be stored for a long period of time but money can be stored for long time

• Lack of transfer of value:- Under barter system of exchange it was not easy to transfer goods to another person.

For example:If some one want to buy 1kg of rice and he had a cow that he is willing to give but other person don't want payment now he want payment to be made after a month or a year but the value of cow will decrease in future.