Final answer:
Barter is not suitable for coordinating trades in today's complex economies, as it requires finding a rare double coincidence of wants. Money, in contrast, serves multiple critical functions, making it indispensable as a medium of exchange and store of value in a modern economy.
Step-by-step explanation:
Barter is a completely inadequate mechanism for trying to coordinate trades in a modern advanced economy. In its place, money serves pivotal roles such as a medium of exchange, a store of value, a unit of account, and a standard of deferred payment. Without money, individuals must rely on a barter system, which necessitates a double coincidence of wants, making it highly inefficient in complex economic systems with a diverse division of labor.
There are two types of money used in economies: commodity money, which has inherent value, and fiat money, which is valued by government decree. Moreover, money is measured using M1, which includes currency and checking accounts, and M2, encompassing M1 plus savings accounts, certificates of deposit, and money market funds.
The role of banks in managing these financial instruments is also instrumental in facilitating economic transactions. In contrast, bartering can lead to issues since goods, like shoes in a shoemaker's inventory, may lose value over time due to changes in fashion or degradation. Money mitigates such risks by providing a more reliable store of value.