SOS test (barter and currency) (copy)

What is the barter system?

The direct exchange of goods and services without using money.

What are the advantages of the barter system?

• simple and direct trade

• no need for money which makes it useful in situations where currency is not available or accepted.

What are the disadvantages of the barter system?

• Both parties have to have what the other wants

• No standard way to determine the value of goods and services

• Some goods are perishable or difficult to store, such as food items

What is currency?

A system of money (coins and notes) that is widely accepted for goods and services.

What are the advantages of the currency system?

• makes it easy to know how much things are worth

• can be divided into smaller units (e.g., dollars and cents).

• is easy to carry and transport.

• can be saved and used in the future without losing its value.

Why did societies move from barter to currency?

The limitations of barter, such as difficulty finding direct trades, made currency more efficient.

What are the disadvantages of the currency system?

• The value of money can go down over time because of inflation

• Fake money can be made and spread.

• We rely on banks, so their failures can impact economic stability.

• Using money can involve costs like banking fees, credit card charges, and other transaction costs,

What were some early forms of currency?

Shells, gold, and eventually coins and paper money.

What are key features of modern currency?

Governments and banks control money, and everyone uses it to buy and sell things.