The correct answer is option C) barter system.

Barter System:
The barter system is a system of exchanging goods for goods without using money as a medium of exchange. It is a direct exchange of goods and services between two parties. In a barter system, individuals or communities trade their surplus goods or services for other goods or services they need.

Explanation:

1. Definition:
The barter system is an ancient method of trade that predates the use of money. It involves the direct exchange of goods and services between individuals or communities without the involvement of money.

2. No Monetary Medium:
Unlike in a monetary system, where money serves as a medium of exchange, the barter system relies solely on the goods or services being exchanged. There is no standardized unit of value or medium of exchange like currency.

3. Exchanging Surplus Goods:
The barter system typically involves the exchange of surplus goods or services. For example, if a farmer has an excess of wheat and needs clothes, he can trade his wheat with a tailor who needs wheat but has surplus clothes.

4. Mutual Agreement:
In a barter system, both parties must agree on the terms of exchange. They negotiate the quantity, quality, and value of the goods or services being exchanged.

5. Limitations:
The barter system has several limitations. It requires a double coincidence of wants, meaning both parties must have something the other party desires. It can also be challenging to determine the value of goods or services being exchanged without a standardized unit of value.

6. Historical Significance:
The barter system played a significant role in early human societies before the invention of money. It facilitated trade and allowed individuals to obtain goods or services they needed without using currency.

Conclusion:
The barter system is a system of direct exchange of goods and services without the use of money. While it has limitations, it has historically served as a means of trade before the advent of currency.