Question

6.(a) What is commodity money?
(b) Identify any three problems associated with trade by barter.
(c) Explain any three ways by which the advent of money has solved the problems of the barter system.

Accepted Answer

(a) Commodity money is any commonly accepted product or material that can be used as a means of settling debts and payments (e.g. cowries, gold).
(b) Problems of barter: the problem of double coincidence of wants; the problem of measurement of value; the problem of store of value.
(c) Money solves barter's problems by: removing the need for a double coincidence of wants (money can be used to settle any type of debt and make any form of payment); providing a good, common measure of value for all commodities; serving as a store of value, unlike perishable barter goods.

WAEC Economics 2018 Theory — Question 6

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