The conversion of a barter economy to one that uses money
A)increases efficiency by reducing the need to exchange goods and services.
B)increases efficiency by reducing the need to specialize.
C)increases efficiency by reducing transactions costs.
D)does not increase economic efficiency.

Question

Quizplus · Accepted Answer

In a barter economy, the parties involved in a transaction must have a coincidence of wants, meaning that they must both want and need what the other has to offer. This can lead to inefficiencies and higher transaction costs. However, with the use of money, transactions can occur more easily and efficiently, reducing transaction costs and increasing overall economic efficiency. Money allows for a more specialized economy, where individuals can focus on producing what they are most efficient at, leading to higher productivity and economic growth.

The Conversion of a Barter Economy to One That Uses