IBPS RRB Office Assistant Model Paper 1

For each of the following passages, read the passagecarefully and answer the questions that follow. Certain words are marked in boldto help you locate them while answering some of the questions.

Barter is a method of exchange by which goods or services are directlyexchanged for other goods or services without using a medium of exchange, such asmoney. It is usually bilateral, but may be multilateral, and usually exists parallel tomonetary systems in most developed countries, though to a very limited extent. Barterusually replaces money as the method of exchange in times of monetary crisis, suchas when the currency may be either unstable (e.g.: hyper inflation or deflationaryspiral) or simply unavailable for conducting commerce.

Contrary to popular conception, there is no evidence of a society or economythat relied primarily on barter. Instead, non - monetary societies operated largely alongthe principles of gift economics. When barter did in fact occur, it was usually betweeneither complete strangers or would - be enemies.

While one - to - one bartering is practiced between individuals and businesseson an informal basis, organized barter exchanges have developed to conduct thirdparty bartering. A barter exchange operates as a broker and bank in which eachparticipating member has an account that is debited when purchases are made, andcredited when sales are made. Compared to one - to - one bartering, concerns overunequal exchanges are reduced in a barter exchange.

Modern trade and barter has developed into a sophisticated tool that cansometimes help businesses increase their efficiencies by monetizing their unusedcapacities and excess inventories. The worldwide organized barter exchange and tradeindustry has grown to an $8 billion a year industry and is used by thousands ofbusinesses and individuals. The advent of the Internet and sophisticated relationaldatabase software programs has made it easier to conduct these activities and hasfurther advanced the barter industry's growth. Organized barter has grown globally tothe point where virtually every country now has a formalized barter and trade networkof some kind. Complex business models based on the concept of barter are todaypossible since the advent of Web 2.0 technologies.

Bartering benefits companies and countries that see a mutual benefit inexchanging goods and services rather than cash, and it also enables those who arelacking hard currency to obtain goods and services. To make up for a lack of hardcurrency, Thailand's township, Amphoe Kut Chum, once issued its own local scrip called Bia Kut Chum: Bia is Thai for cowry shell, was once 1/6400 Baht, and is stillcurrent in metaphorical expressions. Running afoul of national currency laws, thecommunity changed to barter coupons called Boon Kut Chum that bear a fixed valuein baht, which they swap for goods and services within the community.

A trade or barter exchange is a commercial organization that provides atrading platform and bookkeeping system for its members or clients. The membercompanies buy and sell products and services to each other using an internalcurrency known as barter or trade dollars. Modern barter and trade has evolvedconsiderably to become an effective method of increasing sales, conserving cash,moving inventory, and making use of excess production capacity for businessesaround the world. Businesses in barter earn trade credits (instead of cash) that aredeposited into their account. They then have the ability to purchase goods andservices from other members utilizing their trade credits - they are not obligated topurchase from whom they sold to, and vice - versa. The exchange plays an importantrole because they provide the record - keeping, brokering expertise and monthlystatements to each member. Commercial exchanges make money by charging acommission on each transaction either all on the buy side, all on the sell side, or acombination of both. Transaction fees typically run between 8 and 15%.

It is estimated that over 350,000 businesses in the United States are involvedin barter exchange activities. There are approximately 400 commercial and corporatebarter companies serving all parts of the world. There are many opportunities forentrepreneurs to start barter exchange. Several major cities in the U.S. and Canada donot currently have a local barter exchange. There are two industry groups, the NationalAssociation of Trade Exchanges (NATE) and the International Reciprocal TradeAssociation (IRTA). Both offer training and promoter high ethical standards amongtheir members. Moreover, each has created its own currency through which itsmember barter companies can trade. NATE's currency is known as the BANC andIRTA's currency is called Universal Currency (US).

The first exchange system was the Swiss WIR Bank. It was founded in 1934as a result of currency shortages after the stock market crash of 1929. ''WIR'' is bothan abbreviation of Wirtschaftsring and the word for ''we'' in German, remindingparticipants that the economic circle is also a community.