Final answer:
Social distance can influence the type of economic exchange an individual engages in by affecting trust, familiarity, and social connections. Close social ties often lead to reciprocal exchanges, while higher social distance may result in more impersonal exchanges based on market mechanisms.
Step-by-step explanation:
Social distance refers to the degree of closeness or remoteness between individuals in a social group or society. It can influence the type of economic exchange an individual engages in by affecting their level of trust, familiarity, and social connections with others.
For example, individuals who have close social ties and strong relationships are more likely to engage in reciprocal economic exchanges, such as sharing resources, favors, or services, with each other. This can be seen in close-knit communities or small-scale societies where people rely on trust and cooperation for economic transactions.
On the other hand, individuals who have higher social distance, such as being part of a larger society with diverse and unfamiliar individuals, may engage in more impersonal economic exchanges. These exchanges are often based on market mechanisms, monetary transactions, and formal contracts, rather than relying on personal relationships or mutual obligations.