Barter Trade and Introduction to Money

Barter Trade and Introduction to Money

Barter Trade
 The first type of trade that carried out by man is called Barter Trade
 Barter Trade is the exchange of goods with other goods
 However, there are a lot of difficulties of Barter Trade, that why it become impractical in the modern day
 The difficulties are:

a. To find a double coincidence of wants
b. To agree on the exchange value of goods

c. To honor a barter agreement


MONEY

                    

 Money is anything that is acceptable by another person as a settlement of a debt or in payment for goods and services

 The functions of money are:

a. A medium of exchange – it is an accepted payment in exchange for goods and services

b. A measure of value – it is a means by which man can measure the value of goods and services

c. A standard of future payments – it helps to keep the value of goods and services steady

d. A storehouse of value – it can be stored away or saved to be used at a future date



 The qualities of a good money are:

1. Acceptability – others should be willing to accept it as payment for goods and services and also as settlement of debt

2. Divisibility – it should be easily divisible into smaller units without any loss in value

3. Durability – it must be lasting and not liable to rust, rot or die

4. Stability in its value – it should not change its value frequently

5.Easy recognizibility – it should be easily recognized and at the same time not easily forged or imitated

6. Portability – it should be easily carried about

7. Homogeneity – it must be of the same nature throughout