Question

As opposed to a payments system based on barter, a payments system based on money Select one: a. requires a double coincidence of wants. b. leads to less specialization. c. makes trades less costly. d. None of the above is correct.

Answer 1

Answer:

c. makes trades less costly.

Explanation:

Payments system are means through which goods and services rendered are been paid for.

Payments system can also be defined as systems or mechanism that have been put in place in order to be able to effectively settle or pay back financial transactions for services rendered.

Example of Payment systems include:

a) Payments system based on barter: This is one of the old methods of payments for goods and services rendered by a particular party. This method involves an exchange or transfer of goods and services for another goods and services that matches the value of the goods and services been paid for. It is important to note that money is not used in a trade by barter system.

b) Payments system based on money: After currency was invented by countries of the world, payment systems evolved and money was used to settle any form of transactional activities. Payment system based on money is a means whereby goods and services been rendered by a particulars body is paid for using currency also know as money.

One of the major advantages of using payments system based on money over the payment system based on trade by barter is because payment system based on money, makes trading amongst people less costly.