Trade and Money Flashcards
What do we call the system of trade in which the value of something was determined in relation to another object.
bartering
What is the double wants problem?
If you want to exchange wheat for goats, you have to find someone who has goats AND wants wheat.
What important invention resulted from the double wants problem?
Money
How does money solve the double wants problem.
It has a standardised value by convention, but no inherent value.
What are the pros and cons of electronic banking>
Pros:
Quick - don’t need to go to bank
Convenient - any time, anywhere
Efficient - computers are faster than human tellers
Cons:
Security - someone can steal your password and take control of your money
What are bank cards used for?
To make payments
To conduct transactions at ATM
What are the characteristics of money that bank cards have?
Scarce - can’t be copied
Durable - don’t fall apart
Portable - easy to carry around
Divisible - can pay any price
What information is shown on a bank card?
Name of the issuing bank Card holder name and signature Unique card number Expiry date Security feature (magnetic strip or chip) to prevent duplication
Traditional societies lived on what they produced and did not need to trade. What word do we use to describe this?
self-sufficient
Give examples of self-sufficient societies.
hunter-gatherers (San) in South Africa
Twa in Congo
Inuit in Alaska
Aborigines in Australia
How did/do self-sufficient societies survive?
Hunting and gathering - wild animals and food from plants
How did self-sufficient societies get the goods and services they needed?
The produced them themselves
What is the name for the economy of a self-sufficient society?
A subsistence economy
What were the disadvantages of bartering?
Not always practical
Difficult to find what you wanted or needed
Goods were difficult to carry or transport
No common measure of value
Certain goods could not be divided into smaller units
No late payments
Storing goods is difficult
Difficult to know the real value of items
What was the first form of money? Where and when?
Cowry shells. China 1200 BC
Where and when were the earliest coins used? What form did they take?
Lydia (in Turkey) in 500 BC. Pieces of silver
Where and when were the earliest banknotes used? What were they made of?
China 118 BC. :Leather
What do we call a modern society that uses technology to produce goods for trade?
Industrialised society
What do modern societies us to pay for goods and services?
Coins, bank notes
Debit and credit cards
Electronic/Internet banking
How do people with specialised skills provide for their needs?
They earn money which they use to buy goods and services produced by other people.
What did we call hunters who started to tame and keep animals?
Herders
When did bartering start?
9000 BC
What allowed people to specialise in the production of specific goods and services?
Trade. They could barter their speciality products and services for other things.
What did herders prefer to use their livestock for?
Milk rather than meat.
What is a promissory note?
A written and signed promise to pay a sum of money.
What do we call the person to whom the money is promised in a promissory note?
Payee
What pieces of information are shown on a promissory note?
The words "Promissory Note" Amount that the note is worth Interest that will be added When the payment is to be made Place where the payment is to be made Name of the payee Name of the payer Payer's signature Terms of repayment Date until when the note is valid
What are the advantages and disadvantages of using the Internet for buying and banking?
Advantages:
Available 24 hours a day
Consumers and producers need not be in the same place
More choice in products and services
Saves on travelling and time
Faster communication and access to information
Disadvantages:
More information required by online store (fill in forms)
Personal information not always safe. Potential for fraud.
Cannot check the quality before you buy
No personalised customer service
Difficult to return faulty goods
What are the security features on a South African banknote?
Watermark within the paper
Security thread running through the paper
High quality paper
Print quality
When people started trading goods for money, they gathered in certain areas to make it easier for buyers and sellers to meet. What do we call this process?
Urbanisation
What are the uses of money?
medium of exchange
unit of account - standard measure of what things are worth
store of value - holds its value over time
What is a consumer economy?
An economy where businesses encourage consumers to spend as much money as possible on their goods and services.
What are sustainable resources?
Resources that can be re-generated
What are the four characteristics of money?
Scarce
Durable
Portable
Divisible into smaller parts
What is a surplus?
More of something than is needed
Why is a surplus important for trade?
People could specialise in the production of one item, producing a surplus of that item, which they could then trade for other goods.
What were the results of specialisation?
More goods are produced
A greater variety of goods is produced
What is a market?
A place where people come together to buy and sell goods
What is indirect trade?
Individuals accept money for the products they have produced and then use the money to buy other goods and services.
What is money?
An object that can be exchanged for goods and services (but has very little inherent value)
What is a medium of exchange?
An item that is used to make trade easier. E.g. notes and coins
What does durable mean?
lasts for a long time and is not easily broken or used up
What is a cheque?
a written instruction to a bank ordering them to pay a certain sum of money to the person named on the cheque
What is a credit card?
A type of bank card that allows the holder to borrow money to make payments.
What is a debit card?
A type of bank card that allows the holder to make payments from money that they have deposited in the bank
