Barter Economy  

To barter means to trade goods directly rather than through the medium of money.

Thus a barter economy is one where money does not exist or has ceased to be functional. It means consumers have to gain goods through exchange.

Primitive economies developed through bartering goods. But, this is very inconvenient for a developing and more complex economy. Therefore, money tends to involve as a way to facilitate transactions between 2 people.

Hyper inflation and Barter Economy.

Hyper inflation is extreme examples of inflation where prices skyrocket and the value of money becomes worthless. In these cases people often resort to bartering goods directly. For example, in Germany 1922-23 money became worthless.

Related Essays and Revision Notes