Question

Ryan traded his tablet PC for a cellphone. Since both were of the same value, there was no exchange of money. Which of the following concepts does this scenario illustrate?

a) Barter system
b) Currency exchange
c) Countertrade
d) Electronic funds transfer

Answer 1

The scenario where Ryan trades his tablet PC for a cellphone without the use of money is an example of the barter system, an ancient form of trade that requires a double coincidence of wants.

Step-by-step explanation:

Ryan's exchange of his tablet PC for a cellphone, where no money was transferred between the parties, is an illustration of the barter system. In such a system, goods or services are traded directly for other goods or services without the use of currency. This form of trade differs from currency exchange, countertrade, and electronic funds transfers as it does not involve any intermediary instruments or monetary units to facilitate the trade.

The barter system is an ancient method of exchange that predates the invention of money, where individuals would trade items that they have in abundance for items that they need, requiring a double coincidence of wants. This is in contrast to modern economies which largely rely on money as a medium of exchange, simplifying transactions and enabling more complex economic interactions.