The practice of of exchanging goods and services directly for other goods and services is called Group of answer choices
Commerce
Haggling
Factor markets
Barter
The correct answer and explanation is:
The correct answer is Barter.
Barter is the practice of exchanging goods and services directly for other goods and services without using money as an intermediary. This system was used long before money was introduced and is considered one of the earliest forms of trade. In a barter system, both parties agree on the value of what they are offering and receiving, and the transaction happens without the need for any form of currency.
One of the key aspects of barter is that it relies heavily on the mutual satisfaction of both parties involved. If one party wants a specific good or service and the other party has it, they can exchange what they have in return. The exchange must be equitable, meaning both parties must agree on what the trade is worth to them.
However, there are limitations to the barter system. One of the main issues is the double coincidence of wants—both parties must want what the other has to offer. This makes barter inefficient compared to modern economies, where money acts as a medium of exchange. For example, if you have a cow but need wheat, you would have to find someone who has wheat and is also in need of a cow. If that doesn’t happen, the trade cannot occur.
Barter also becomes complicated when goods and services differ in value or when one party wants to make a large exchange. As economies grew, people realized the limitations of barter, which led to the development of currency systems. Even so, barter is still used in some areas, especially when money is not available or when people wish to avoid using it. It can also be a form of informal economy in certain communities.