Development of Economic Activities Flashcards
What is meant by having a survival mentality?
Only providing for what was needed at each moment instead of thinking of a way to improve your lifestyle.
What is meant by subsistence economies?
When man provides for himself without thinking of improving his way of life.
What are economic activities?
Activities human beings are engaged in in order to satisfy their basic needs.
E.g. hunting, fishing etc.
What is direct production?
Providing for yourself and family without the help of others.
What is productive activity?
Creating tools and specializing in growing different types of crops to produce more.
What is surplus?
The extra that was produced by each family or person.
Why was surplus a good problem?
Because more goods were produced than what was needed and families didn’t know what to do with the extra.
What system solved the surplus problem?
The barter system
What is barter?
A system of exchange of goods and services for other goods and services without the use of money.
True or False
Barter involved the exchange of tangible items only.
False
List one advantage of the barter system
- It provided a way to dispose of surplus products.
- It enabled a person to get what he or she did not have OR could not produce.
- Trading could take place without money.
How does Modern Day Barter benefit individuals, companies and countries?
They see a mutual benefit in exchanging without the use of money.
List the problems or disadvantages of the barter system.
▶ Indivisibility of Goods
▶ A double coincidence of wants
▶ Storage of wealth
▶ An exchange rate
Barter Problems
Why was Indivisibility of goods a problem?
Some goods were not able to split into smaller parts to make the exchange process fair.
Barter Problems
Why was a double coincidence of wants a problem?
A person had to find someone who wanted what he/she had to exchange, and that other person had to have what was needed so exchange could take place.
Barter Problems
Why was Storage of Wealth a problem?
Due to spoilage, some goods could not be stored for a long period of time, and that made the exchange unfair.
Barter Problems
Why was the exchange rate a problem?
The true value of items/services was not always arrived at and so some of the exchanges were not necessarily fair.
E.g. exchanging fruits for a
chicken.
What solved the problems in the barter system?
Money
What is money?
Any commodity used as a medium of exchange and a measure of value
The value of money is based on what?
The number of products it can buy
It’s purchasing power
What is inflation?
A situation where prices are persistently rising and the real value of money is declining.
What are the
Functions of money?
- Medium of exchanged
- Measure of Value (Unit of Account)
- Store of value
- Standard for deffered or postponed payments
MM-SS
What are the
Characteristics of money?
- Portability
- Homogenous
- Acceptable
- Durable
- Divisible
- Stable
PHADDS
