The Development of Money: From Barter to Modern Currency

Vocabulary flashcards covering the definition of money, the barter system, its advantages and disadvantages, and the characteristics and functions of money based on Grade 10 Principles of Business notes.

Barter

The exchange of goods and services for other goods and services without the use of money.

Double coincidence of wants

A requirement for barter to work where two people each want what the other person has to offer.

Money

Any commodity that is generally acceptable as a measure of value and medium of exchange.

Advantages of Barter

Facilitates trade without money, enables the disposal of surplus production, increases availability of goods, and lays the foundation for organized trading.

Disadvantages of Barter

Required double coincidence of wants, lack of equitable exchange rate, difficulty in dividing goods fairly, and inability to store wealth over time.

Indivisibility

A problem in the barter system where it is difficult to decide how to divide goods fairly or determine an exchange rate, such as Ancient Tim's peas and Zion's large fishes.

Medium of exchange

A function of money that allows it to be used to trade for goods and services, solving the problem of double coincidence of wants.

Unit of account

A function of money that provides a measure of value for goods and services.

Store of value

A function of money that allows wealth to be kept and used at a later date, unlike perishable barter items.

Standard of deferred payment

A function of money that allows for the settlement of debts or payments to be made in the future.

Durable

A characteristic of money meaning it must be able to withstand wear and tear over time.

Portable

A characteristic of money meaning it is easy to carry around.

Divisible

A characteristic of money meaning it can be broken down into smaller units to facilitate different transaction values.

Uniform

A characteristic of money meaning that all versions of the same denomination must look the same.

Scarce

A characteristic of money meaning it is limited in supply to maintain its value.

Acceptable

A characteristic of money meaning it is widely recognized and taken as payment for goods and services.