Test: From Barter to Money - Class 7 MCQ

Portability refers to how easy it is to carry money, which is essential for facilitating trade.

• Money that is lightweight and easy to transport enables more efficient transactions.
• In contrast, cumbersome items, such as livestock, are much harder to move.
• Effective portability enhances the convenience of buying and selling.

The introduction of paper money greatly facilitated trade by:

• Allowing individuals to carry larger sums of money without the weight of coins.
• Enabling more efficient transactions, making exchanges quicker and easier.
• Encouraging larger transactions, which helped expand commerce.

Overall, paper money simplified trade and improved economic interactions.

Coins provided a standardized measure of value, making it easier to compare the worth of different goods and services. This was a major improvement over the subjective values associated with barter transactions.

• Standardisation allows for clear pricing.
• Facilitates trade by reducing confusion.
• Enables larger and more complex transactions.

Standard of deferred payment refers to the capability of using money for transactions where payment can occur at a later date. This concept offers several advantages:

• Enables flexibility in financial arrangements.
• Supports agreements such as credit purchases.
• Facilitates transactions that do not require immediate payment.

This allows individuals and businesses to manage their finances more effectively.

Double coincidence of wants refers to a situation in barter where:

• Each party must have what the other desires for a trade to take place.
• This requirement can make trading difficult and inefficient.
• It underscored the limitations of barter systems.
• This inefficiency led to the development of money as a more effective medium of exchange.

The barter system faced significant challenges due to its reliance on a double coincidence of wants. This meant that:

• Both parties had to desire what the other was offering,
• Making trade complicated and inefficient.

A common standard of value was essential for simplifying exchanges. This necessity is a primary reason for the development of money, which facilitates trade by providing a universally accepted medium.

UPI stands for Unified Payment Interface. It is a digital payment system that enables:

• Real-time money transfers between bank accounts
• Convenient transactions via mobile devices
• Enhanced accessibility to digital payments

This system illustrates how technology has revolutionised the concept of money, making it more efficient and accessible.

Ancient coins often featured symbols or images that represented their value and origin. This design played a crucial role in facilitating trade by ensuring that:

• Merchants could easily recognise the coins.
• Their value was understood across different regions.
• Trust was established between trading partners.

As a result, these coins helped promote commerce and economic interaction across diverse cultures.

A “store of value” is an asset that maintains its value over time. It allows individuals to save money for future use, enabling them to postpone spending. This characteristic is essential for money, differentiating it from items that can lose value, like perishable goods.

A significant limitation of the barter system is the perishability of goods. This can create several challenges, including:

• Storage difficulties: Perishable items cannot be kept for long periods, making it hard to store them for future trade.
• Limited trading time: Traders must quickly exchange these goods to avoid spoilage.
• Value fluctuation: The value of perishable goods can change rapidly, complicating fair trade.

In contrast, money allows for easier storage and future use, avoiding these issues.

Divisibility is crucial for money as it allows it to be broken down into smaller units, which facilitates transactions of various sizes. Here are some key points about its importance:

• It enables the use of different denominations for various purchases.
• Smaller units allow for transactions that may not match an exact amount.
• This flexibility supports both small and large transactions effectively.

For example, a £10 note can be exchanged for smaller coins, making it easier to buy items of varying costs.

The ₹ symbol was designed to reflect India's cultural heritage, combining elements from both Devanagari and Latin scripts, alongside two stripes inspired by the national flag. This design emphasizes the nation's identity and unity.

Cowrie shells were among the earliest forms of money used in various cultures. Their popularity can be attributed to several factors:

• Availability: Cowrie shells were widely found in many regions.
• Durability: They are robust and can withstand wear and tear.
• Medium of exchange: They facilitated trade long before the introduction of coins and paper currency.

These characteristics made cowrie shells a valuable asset in early economies.

Trading old clothes for new utensils is an example of modern barter, where goods are exchanged directly without using money. This method illustrates the ongoing relevance of barter in specific situations, even in a world dominated by currency.

John Maynard Keynes viewed money as a crucial tool that connects the present to the future. It enables individuals to:

• Save for future needs
• Spend at different times

This function is essential for economic planning and stability.