Barter

View FREE Lessons!

Definition of Barter:

Barter is the exchange of one good or service for another without using money.  

Detailed Explanation:

Imagine living in an economy where there are no stores. If your family needs meat, someone hunts. You would grow your grain and vegetables, make your own clothes, and build your own shelter. Perhaps your neighbor returns from a very productive hunt. You trade some clothing for food. This kind of trade is barter or the exchange of two goods or services without the use of money. Many cultures living in very isolated areas rely on bartering. These include the Australian Aborigines and Amazon tribes. These people live in traditional economies. Traditional economic systems rely on cultural traditions to govern the production, distribution, and consumption of goods and services in a society. In these societies, people primarily rely on bartering, farming, and hunting and gathering. Their family ties are of critical importance to their place or "station" in life. Family and gender determine many facets of individuals' lives, including job, economic status, and social status. 

Bartering is also common during periods of hyperinflation. Hyperinflation results in the devaluation of money so rapidly that people find that the goods they own hold their value better than the currency, so they barter, or trade for goods and services. They also spend their paychecks as soon as they receive them to avoid “losing” their money through sharp price increases.

In 2008, inflation in Zimbabwe hit 231,000,000 percent. Imagine a candy bar that cost $1.00 in 2007 costing $2,310,000 one year later! People stopped using their money. Bartering became the norm. When they did pay with money, the currency of choice was the American dollar. Fortunately, Zimbabwe’s inflation is more under control, and the country has begun to emerge from the devastation caused by hyperinflation.

Here is a brief video discussing the concept of Barter more: 


Dig Deeper With These Free Lessons:

Economic Systems
Inflation
Opportunity Cost – The Cost of Every Decision

Search the Glossary


Investment Calculator:

Market Overview:

Market quotes are powered by TradingView.com

Single Quote:

© 2018 Higher Rock Education and Learning, Inc. All rights reserved. No portion of this site may be copied or distributed by any means, including electronic distribution without the express written consent of Higher Rock Education and Learning, Inc.