Class 7 Social Science Chapter 11 NCERT Book - From Barter to Money

 Page 1


229
Economic Life Around Us  
11 – From Barter to Money
CHAPTER
11
 
From Barter to Money
The importance of money flows from it being a link 
between the present and the future.
1. How did exchange take place 
before money? 
2. Why did money come into 
existence?  
3. How has money transformed 
into various forms over time? 
The Big 
Questions
– John Maynard Keynes  
20th century economist
In the theme “Tapestry of the Past”, you read about the crops 
that people grew, such as food grains or goods they made like 
carnelian beads. How do you think they exchanged these 
goods for things that they needed? 
Fig. 11.1
Chapter 11.indd   229 Chapter 11.indd   229 08-04-2025   12:58:29 08-04-2025   12:58:29
Page 2


229
Economic Life Around Us  
11 – From Barter to Money
CHAPTER
11
 
From Barter to Money
The importance of money flows from it being a link 
between the present and the future.
1. How did exchange take place 
before money? 
2. Why did money come into 
existence?  
3. How has money transformed 
into various forms over time? 
The Big 
Questions
– John Maynard Keynes  
20th century economist
In the theme “Tapestry of the Past”, you read about the crops 
that people grew, such as food grains or goods they made like 
carnelian beads. How do you think they exchanged these 
goods for things that they needed? 
Fig. 11.1
Chapter 11.indd   229 Chapter 11.indd   229 08-04-2025   12:58:29 08-04-2025   12:58:29
230
Exploring Society: India and Beyond | Grade 7 Part 1
People exchanged goods or services for other goods and 
services. This system is called the barter system. How did 
this work? Suppose you need a pencil and have an extra 
eraser. Meanwhile, your classmate forgot to bring their 
eraser but has an extra pencil. You could exchange your 
extra eraser for the extra pencil that your classmate has. 
Wouldn’t this satisfy your and the classmate’s needs? This 
is how the barter system works. 
Today, we use coins and notes to buy and sell things. People 
also use their mobile phones and computers for such 
transactions.
The barter system was the earliest form of exchange. There 
is a lot of evidence of it from around the world.  People 
used commodities such as cowrie shells, salt, tea, tobacco, 
cloth, cattle (cows, goats, horses, sheep), seeds, etc. 
Transaction: 
a piece of 
business 
that is done 
between 
people, 
especially an 
act of buying 
or selling.
Commodities: 
Products  
or goods  
that can  
be traded,  
bought  
and sold. 
Barter 
System: 
a way of 
exchanging 
goods and 
services 
without using 
mone y .     
Money: 
the common 
tool that 
everybody 
accepts and 
uses in order 
to make 
or receive 
payments in 
exchange for 
goods and 
services.
Fig.11.2.2. The Aztec copper 
Tajadero (Spanish word for 
chopping knife) was a form of 
money used in Central Mexico 
and parts of Central America.
Fig. 11.2.1. Stone Money: Giant 
discs of rock – called Rai stones 
– were used as money on the 
Yap Island, in the Pacific Ocean 
country of Micronesia.
Fig. 11.2.3.Tevau (Red 
feather coil made from birds’ 
feathers) used as money on 
the Solomon Islands.
Chapter 11.indd   230 Chapter 11.indd   230 08-04-2025   12:58:31 08-04-2025   12:58:31
Page 3


229
Economic Life Around Us  
11 – From Barter to Money
CHAPTER
11
 
From Barter to Money
The importance of money flows from it being a link 
between the present and the future.
1. How did exchange take place 
before money? 
2. Why did money come into 
existence?  
3. How has money transformed 
into various forms over time? 
The Big 
Questions
– John Maynard Keynes  
20th century economist
In the theme “Tapestry of the Past”, you read about the crops 
that people grew, such as food grains or goods they made like 
carnelian beads. How do you think they exchanged these 
goods for things that they needed? 
Fig. 11.1
Chapter 11.indd   229 Chapter 11.indd   229 08-04-2025   12:58:29 08-04-2025   12:58:29
230
Exploring Society: India and Beyond | Grade 7 Part 1
People exchanged goods or services for other goods and 
services. This system is called the barter system. How did 
this work? Suppose you need a pencil and have an extra 
eraser. Meanwhile, your classmate forgot to bring their 
eraser but has an extra pencil. You could exchange your 
extra eraser for the extra pencil that your classmate has. 
Wouldn’t this satisfy your and the classmate’s needs? This 
is how the barter system works. 
Today, we use coins and notes to buy and sell things. People 
also use their mobile phones and computers for such 
transactions.
The barter system was the earliest form of exchange. There 
is a lot of evidence of it from around the world.  People 
used commodities such as cowrie shells, salt, tea, tobacco, 
cloth, cattle (cows, goats, horses, sheep), seeds, etc. 
Transaction: 
a piece of 
business 
that is done 
between 
people, 
especially an 
act of buying 
or selling.
Commodities: 
Products  
or goods  
that can  
be traded,  
bought  
and sold. 
Barter 
System: 
a way of 
exchanging 
goods and 
services 
without using 
mone y .     
Money: 
the common 
tool that 
everybody 
accepts and 
uses in order 
to make 
or receive 
payments in 
exchange for 
goods and 
services.
Fig.11.2.2. The Aztec copper 
Tajadero (Spanish word for 
chopping knife) was a form of 
money used in Central Mexico 
and parts of Central America.
Fig. 11.2.1. Stone Money: Giant 
discs of rock – called Rai stones 
– were used as money on the 
Yap Island, in the Pacific Ocean 
country of Micronesia.
Fig. 11.2.3.Tevau (Red 
feather coil made from birds’ 
feathers) used as money on 
the Solomon Islands.
Chapter 11.indd   230 Chapter 11.indd   230 08-04-2025   12:58:31 08-04-2025   12:58:31
231
Economic Life Around Us  
11 – From Barter to Money
Why Do we Need Money? 
LET’S EXPLORE
Imagine that you are a 
farmer and that people 
use a barter system where 
you live. You need a whole 
variety of things — a pair 
of new shoes, a sweater, 
and medicines for your 
grandmother. But you only 
have an ox that you can 
spare. How would you be 
able to exchange the ox for 
all the different things you 
need from different people or 
places? What difficulties are 
you likely to face? 
For one, you would have to 
find someone who needed an 
ox. Now, swapping your ox for 
a pair of shoes would hardly be a fair exchange! You may have 
had to go through a series of exchanges — for example, find 
someone to exchange your ox 
for several bags of wheat. You 
would then have to transport 
all that wheat to several 
places; first, find someone 
willing to exchange a part of 
the wheat for shoes, another 
person for the sweater, and 
yet another for the medicines. 
Chapter 11.indd   231 Chapter 11.indd   231 08-04-2025   12:58:32 08-04-2025   12:58:32
Page 4


229
Economic Life Around Us  
11 – From Barter to Money
CHAPTER
11
 
From Barter to Money
The importance of money flows from it being a link 
between the present and the future.
1. How did exchange take place 
before money? 
2. Why did money come into 
existence?  
3. How has money transformed 
into various forms over time? 
The Big 
Questions
– John Maynard Keynes  
20th century economist
In the theme “Tapestry of the Past”, you read about the crops 
that people grew, such as food grains or goods they made like 
carnelian beads. How do you think they exchanged these 
goods for things that they needed? 
Fig. 11.1
Chapter 11.indd   229 Chapter 11.indd   229 08-04-2025   12:58:29 08-04-2025   12:58:29
230
Exploring Society: India and Beyond | Grade 7 Part 1
People exchanged goods or services for other goods and 
services. This system is called the barter system. How did 
this work? Suppose you need a pencil and have an extra 
eraser. Meanwhile, your classmate forgot to bring their 
eraser but has an extra pencil. You could exchange your 
extra eraser for the extra pencil that your classmate has. 
Wouldn’t this satisfy your and the classmate’s needs? This 
is how the barter system works. 
Today, we use coins and notes to buy and sell things. People 
also use their mobile phones and computers for such 
transactions.
The barter system was the earliest form of exchange. There 
is a lot of evidence of it from around the world.  People 
used commodities such as cowrie shells, salt, tea, tobacco, 
cloth, cattle (cows, goats, horses, sheep), seeds, etc. 
Transaction: 
a piece of 
business 
that is done 
between 
people, 
especially an 
act of buying 
or selling.
Commodities: 
Products  
or goods  
that can  
be traded,  
bought  
and sold. 
Barter 
System: 
a way of 
exchanging 
goods and 
services 
without using 
mone y .     
Money: 
the common 
tool that 
everybody 
accepts and 
uses in order 
to make 
or receive 
payments in 
exchange for 
goods and 
services.
Fig.11.2.2. The Aztec copper 
Tajadero (Spanish word for 
chopping knife) was a form of 
money used in Central Mexico 
and parts of Central America.
Fig. 11.2.1. Stone Money: Giant 
discs of rock – called Rai stones 
– were used as money on the 
Yap Island, in the Pacific Ocean 
country of Micronesia.
Fig. 11.2.3.Tevau (Red 
feather coil made from birds’ 
feathers) used as money on 
the Solomon Islands.
Chapter 11.indd   230 Chapter 11.indd   230 08-04-2025   12:58:31 08-04-2025   12:58:31
231
Economic Life Around Us  
11 – From Barter to Money
Why Do we Need Money? 
LET’S EXPLORE
Imagine that you are a 
farmer and that people 
use a barter system where 
you live. You need a whole 
variety of things — a pair 
of new shoes, a sweater, 
and medicines for your 
grandmother. But you only 
have an ox that you can 
spare. How would you be 
able to exchange the ox for 
all the different things you 
need from different people or 
places? What difficulties are 
you likely to face? 
For one, you would have to 
find someone who needed an 
ox. Now, swapping your ox for 
a pair of shoes would hardly be a fair exchange! You may have 
had to go through a series of exchanges — for example, find 
someone to exchange your ox 
for several bags of wheat. You 
would then have to transport 
all that wheat to several 
places; first, find someone 
willing to exchange a part of 
the wheat for shoes, another 
person for the sweater, and 
yet another for the medicines. 
Chapter 11.indd   231 Chapter 11.indd   231 08-04-2025   12:58:32 08-04-2025   12:58:32
232
Exploring Society: India and Beyond | Grade 7 Part 1
In each of these cases, a discussion would take place to arrive 
at the fair amount of wheat that you could exchange for shoes 
or for the sweater. 
You would have to take the 
leftover bags of wheat and find 
a place to store them safely. 
The next time you needed 
something, you would have to 
carry the bags of wheat with 
you again! 
THINK ABOUT IT
What are the different types of difficulties you encountered 
in the situation above? 
In the farmer’s story, imagine he finds someone who 
is willing to trade a pair of new shoes, a sweater, and 
Chapter 11.indd   232 Chapter 11.indd   232 08-04-2025   12:58:33 08-04-2025   12:58:33
Page 5


229
Economic Life Around Us  
11 – From Barter to Money
CHAPTER
11
 
From Barter to Money
The importance of money flows from it being a link 
between the present and the future.
1. How did exchange take place 
before money? 
2. Why did money come into 
existence?  
3. How has money transformed 
into various forms over time? 
The Big 
Questions
– John Maynard Keynes  
20th century economist
In the theme “Tapestry of the Past”, you read about the crops 
that people grew, such as food grains or goods they made like 
carnelian beads. How do you think they exchanged these 
goods for things that they needed? 
Fig. 11.1
Chapter 11.indd   229 Chapter 11.indd   229 08-04-2025   12:58:29 08-04-2025   12:58:29
230
Exploring Society: India and Beyond | Grade 7 Part 1
People exchanged goods or services for other goods and 
services. This system is called the barter system. How did 
this work? Suppose you need a pencil and have an extra 
eraser. Meanwhile, your classmate forgot to bring their 
eraser but has an extra pencil. You could exchange your 
extra eraser for the extra pencil that your classmate has. 
Wouldn’t this satisfy your and the classmate’s needs? This 
is how the barter system works. 
Today, we use coins and notes to buy and sell things. People 
also use their mobile phones and computers for such 
transactions.
The barter system was the earliest form of exchange. There 
is a lot of evidence of it from around the world.  People 
used commodities such as cowrie shells, salt, tea, tobacco, 
cloth, cattle (cows, goats, horses, sheep), seeds, etc. 
Transaction: 
a piece of 
business 
that is done 
between 
people, 
especially an 
act of buying 
or selling.
Commodities: 
Products  
or goods  
that can  
be traded,  
bought  
and sold. 
Barter 
System: 
a way of 
exchanging 
goods and 
services 
without using 
mone y .     
Money: 
the common 
tool that 
everybody 
accepts and 
uses in order 
to make 
or receive 
payments in 
exchange for 
goods and 
services.
Fig.11.2.2. The Aztec copper 
Tajadero (Spanish word for 
chopping knife) was a form of 
money used in Central Mexico 
and parts of Central America.
Fig. 11.2.1. Stone Money: Giant 
discs of rock – called Rai stones 
– were used as money on the 
Yap Island, in the Pacific Ocean 
country of Micronesia.
Fig. 11.2.3.Tevau (Red 
feather coil made from birds’ 
feathers) used as money on 
the Solomon Islands.
Chapter 11.indd   230 Chapter 11.indd   230 08-04-2025   12:58:31 08-04-2025   12:58:31
231
Economic Life Around Us  
11 – From Barter to Money
Why Do we Need Money? 
LET’S EXPLORE
Imagine that you are a 
farmer and that people 
use a barter system where 
you live. You need a whole 
variety of things — a pair 
of new shoes, a sweater, 
and medicines for your 
grandmother. But you only 
have an ox that you can 
spare. How would you be 
able to exchange the ox for 
all the different things you 
need from different people or 
places? What difficulties are 
you likely to face? 
For one, you would have to 
find someone who needed an 
ox. Now, swapping your ox for 
a pair of shoes would hardly be a fair exchange! You may have 
had to go through a series of exchanges — for example, find 
someone to exchange your ox 
for several bags of wheat. You 
would then have to transport 
all that wheat to several 
places; first, find someone 
willing to exchange a part of 
the wheat for shoes, another 
person for the sweater, and 
yet another for the medicines. 
Chapter 11.indd   231 Chapter 11.indd   231 08-04-2025   12:58:32 08-04-2025   12:58:32
232
Exploring Society: India and Beyond | Grade 7 Part 1
In each of these cases, a discussion would take place to arrive 
at the fair amount of wheat that you could exchange for shoes 
or for the sweater. 
You would have to take the 
leftover bags of wheat and find 
a place to store them safely. 
The next time you needed 
something, you would have to 
carry the bags of wheat with 
you again! 
THINK ABOUT IT
What are the different types of difficulties you encountered 
in the situation above? 
In the farmer’s story, imagine he finds someone who 
is willing to trade a pair of new shoes, a sweater, and 
Chapter 11.indd   232 Chapter 11.indd   232 08-04-2025   12:58:33 08-04-2025   12:58:33
233
Economic Life Around Us  
11 – From Barter to Money
medicines — all in exchange for his ox. Do you think it 
would be easy to come across such a situation? 
Just like the farmer, people who depended on the barter 
system would face many problems in making an exchange 
in their everyday lives. They would have to find someone 
who wants the exact item that they want to give, and in 
return are also able to offer exactly what the other party 
wants. This scenario is called double coincidence of wants.  
Even if there are two people who want each other’s goods 
and are also willing to make an exchange, other issues 
could arise — in what proportion should the two goods be 
exchanged? In such cases, it becomes difficult to compare 
the value of one good against another. If one of the people 
feels that the exchange is disadvantageous, they would not 
be interested in the exchange. This is because there is no 
common standard measure of value.   
THINK ABOUT IT
What are the instances of double coincidence of wants in the 
above example? 
Even if there are two people who want each other’s goods and are 
also willing to make an exchange, other issues could arise — in 
what proportion should the two goods be exchanged? In such 
cases, it becomes difficult to compare the value of one good 
against another. If one of the people feels that the exchange is 
disadvantageous, they would not be interested in the exchange. 
This is because there is no common standard measure of value.
In the situation given above, what are the cases where you could 
encounter the lack of a common standard measure of value?     
Similarly, you cannot exchange only a part of the ox for 
a sweater; this is the problem of divisibility. Taking the 
ox everywhere is a problem and leads to the problem of 
portability.  You solved part of the problem by exchanging 
Double 
coincidence 
of wants: an 
economic 
concept that 
describes a 
situation where 
two people 
each have 
something 
the other 
wants and can 
exchange them 
directly.
Common 
standard 
measure of 
value: an 
agreed-upon 
worth for a 
transaction 
that helps in 
determining 
the value of 
goods and 
services in the 
economy. 
Divisibility: 
The capacity 
of an object 
or material 
to be split 
into pieces or 
portions. 
Portability: 
The ability 
of an 
object or 
material to 
be carried 
or moved 
from one 
place to 
another.  
Chapter 11.indd   233 Chapter 11.indd   233 08-04-2025   12:58:33 08-04-2025   12:58:33