Barter Flashcards
Define economic activity
Activity which results in the satisfaction of our needs.
People are referred to as…
Economic animals
Define Direct Production
Providing all of our needs ourselves without the aid of others.
Define subsistence economy
Providing just sufficient to survive, but not to improve one’s way of life.
Define Barter
…. the exchange of one thing for another without the use of money.
Advantages of Barter
- dispose of surplus
- obtain a wider variety of things they needed specialize
- produce the things they could do best
Define Surplus production
The production of more goods than are required
Define Indirect production
Satisfying needs in co-operation with other people
Barter saw the birth of which type of production?
Indirect production
What are Tangible items?
Items that can be seen and touched. E.g. fishes, gems
What are Intangible items?
Items that cannot be touched or handled. E.g. Entertainment, magic
What are some problems associated with barter? (Disadvantages)
- A double coincidence of wants
- An exchange rate
- Divisibility of goods
- Storage of wealth and store of value
What is the Division of Labour?
The dividing of a job into specified tasks. This leads to specialization.
What are some advantages of the division of labour?
- Workers’ skills increase from doing repeated tasks
- Productivity increases – the time taken is lessened
- Production increases
- Cost of production is reduced
- Quality of production improves
What are some disadvantages of the division of labour?
- Because the work is monotonous it becomes boring
- Workers may lose pride in their job since they are not completing the entire job
- Workers’ creativity is limited
- The use of machinery may lead to unemployment
- If a key worker is absent the assembly line could be interrupted
What is Money?
Money is any commodity, which is accepted as a measure of value and a medium of exchange.
What are some characteristics of Money?
- Durable
- Acceptable
- Divisible
- Portable
- Homogeneous
- Relatively scarce
What are the most common forms of money today?
paper money (fiat money) and coins are the most common forms of money
What are some functions of money?
- A medium of exchange
- A measure of value
- A store of value
- A standard for postponed payments
- A facilitator of the price mechanism
What are some instruments (forms) of payment?
- barter
- bills of exchange
- electronic transfer
- cheques
- money order
- debit cards
- credit cards
- bank draft
- tele-banking and e-commerce telegraphic money transfer
- bank transfers
- M-money/ mobile money and mobile wallets
