Why are economic transactions generally easier with money than with barter?

• A. Money makes all goods and services free of cost.
• B. Money acts as a medium of exchange, eliminating the need for a double coincidence of wants.
• C. Money increases the total amount of goods available in the economy.
• D. Barter systems always result in higher efficiency than monetary systems.

Answer: (B)

Verified step by step guidance

1. Understand the concept of barter: Barter is a system where goods and services are exchanged directly for other goods and services without using money.
2. Recognize the main problem with barter: For a successful barter transaction, both parties must have what the other wants at the same time. This is called the double coincidence of wants.
3. Define money's role: Money acts as a medium of exchange, which means it is widely accepted in exchange for goods and services, removing the need for a double coincidence of wants.
4. Explain how money simplifies transactions: Because money is accepted by everyone, individuals can sell their goods or services for money and then use that money to buy what they need from others, making transactions more efficient.
5. Summarize why money is preferred: Money reduces transaction costs and time, increases market efficiency, and facilitates trade compared to barter systems.