Barter & Money
BARTER
BARTER
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CLICK THE WORD BARTER FOR A VIDEO
https://www.youtube.com/watch?v=ADaY6THQp3Y
What is money?
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Characteristics of Money
 Easily Divisible
 Durable
 Limited Supply (Hard to Counterfeit / Scarce)
 Means of Exchange (currency)
 Accepted Value
 Portable
Easily Divisible



Durable
Hard to Counterfeit
http://banknotes.rba.gov.au/
Visit the link above – in what way do our Australian notes achieve all these requirements ?

Means of Exchange (currency)


Accepted Value
Limited Supply

Portable
Functions of Money
Money is any good that is widely accepted in
exchange of goods and services, as well as payment
of debts.
Goods – items that are manufactured
Services – where skilled individuals perform tasks for us.
Medium of Exchange
Money can be used for exchanging goods and
services.
• If there were no money, goods would have to be
exchanged through the process of barter.
• Such arrangements are often difficult. What if no-one
wants to swap? (double coincidence)
• Money eliminates the need of the double
coincidence of wants. Providing it satisfies all the
characteristics of money.
Money as a Unit of Value
Money measures the value of
various goods and services
which are produced in an
economy.
• In barter economy it was
very difficult to decide as to
how much volume of goods
should be given in
exchange of a given
quantity of a ‘stuff’.
• Money, has saved the
society from this difficulty.
Now the value of various
goods and services are
expressed in terms of money.
Store of value
Money is the most liquid asset (Liquidity measures how
easily assets can be spent to buy goods and services).
• Money’s value can be retained over time.
• It is a convenient way to store wealth. Saving in
money is not only secure but its possibility of being
destroyed is very less.
• It can be used whenever need be.
Standard of Deferred Payments
Money, besides being the basis of current transactions, is
also the basis of deferred payments (using credit).
• As the value of money is known and recognised
debtors and creditors will know what is owed.
Click next slide to view video
CLICK ON THE MONEY FOR A VIDEO
https://www.youtube.com/watch?v=PW72ZnHUBiM