Chapter 1

Question 1

What is barter?

Answer 1

Barter is the exchange of one thing for another without the use of money

Question 2

What are the disadvantages of Barter?

Answer 2

Rate of exchange, perishability of goods, portability ,lack of double coincidence of wants

Question 3

How were the problems associated with barter solved?

Answer 3

They were solved by inventing money

Question 4

Describe the characteristics of money

Answer 4

durable, acceptable, exchangeable, disisible, scare, portable, homogeneous

Question 5

Define Money

Answer 5

Money is anything that is acceptable as a medium of exchange and a means of settling debts

Question 6

What are the functions of money?

Answer 6

A medium of exchange- makes the exchange of goods easier and makes barter unnecessary
A measure of value- money can be used to state prices for goods
A store of value- money can be saved and goods cannot
A standard for postponed payment- money can be earned at one time and spent at another