Correct Option
The correct option is 2 and 3 only.
Explanation
The Barter System is an economic system where goods and services are directly exchanged for other goods and services without the use of a medium of exchange, such as money. It is often referred to as a C-C (Commodity-for-Commodity) economy.
Statement-wise Analysis
- Statement 1 is Incorrect. In a barter system, goods are exchanged directly for other goods. The involvement of money as an intermediary characterizes a monetary economy, not a barter system. If money is used to buy goods, it ceases to be a barter transaction.
- Statement 2 is Correct. The double coincidence of wants is a prerequisite for a barter exchange. This means that an individual desiring to sell a specific commodity must find another individual who not only wants to buy that specific commodity but also possesses the exact commodity the first individual wishes to acquire in return.
- Statement 3 is Correct. Due to the inefficiencies of the barter system-such as the difficulty in finding a double coincidence of wants, lack of a common measure of value, and issues with storing wealth-it has been largely replaced by money as the dominant medium of exchange in modern economies.
Key Takeaway
Key Takeaway: The Barter System relies strictly on the direct exchange of commodities and necessitates a double coincidence of wants, a limitation that led to the evolution of money as a universal medium of exchange.