Course Content
Introduction
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Economics for Life

Some economies in the past did not use money; instead, they used the barter system. It is a simple system. Let’s say that I have two extra bushels of corn, and I need some wheat. I will swap you my two bushels of corn for two bushels of wheat.

The problem is that the barter system depends on what is called a coincidence of wants. Now let’s say that I have three extra pigs, and I ask my neighbor ask to trade them for a cow. However, he does not have any cows he wants to trade, and he does not want any more pigs. That means I have to go searching for someone who wants to trade a cow for my pigs. Money solves this problem, because cows and pigs (and everything that is for sale) can be valued in terms of money. Instead of bartering, I can sell my pigs in the local marketplace and then use that money to buy a cow.