Definition
Barter is the direct exchange of goods and services between two parties without using money. Each participant agrees on the relative value of what is exchanged, often requiring negotiation to meet mutual needs.
Why It Matters
Barter represents the earliest form of trade and is important in understanding the evolution of economic systems. Even today, it is used in situations where currency is scarce, in informal economies, or for direct business-to-business exchanges.
Example
A farmer trading a basket of apples to a tailor in exchange for a handmade shirt is a classic example of barter. Both parties receive something of value without involving money, relying on mutual agreement about the worth of each good.