The system whereby goods are exchanged for goods is known as

The system whereby goods are exchanged for goods is known as the barter system. In this system, goods and services are exchanged for other goods and services without the use of money. For example, a farmer may exchange his crops with a carpenter for furniture, or a tailor may exchange his services with a baker for bread. This system was used in the past before the introduction of money as a medium of exchange. However, it has some limitations such as difficulty in determining the value of goods and services, lack of divisibility, and the need for a double coincidence of wants.