Emergence Of Credit Economy Flashcards
(32 cards)
The early stage of human history was marked by
_______ ________ of small family units.
Able-bodied member of family units were charged with
the task and responsibility of providing the basic needs
of life, such as: food, clothing and shelter.
Economics self-sufficiency
But as man equipped with better tools as well as
learning in the production of goods, surplus goods
beyond the immediate needs of the family became
common. Hence, the need for a system of exchange
termed as ______
barter
_______ is the act of trading goods and services between
two or more parties without the use of money.
Barter
History of barter:
In the days before the dawn of civilization, the
earliest method of acquiring goods that were owned by
someone else was probably by a simple act of _____where brute force and strength had the
force of authority
plunder
or robbery
History of barter:
However, when primitive society gave way to
recognition of private property in any article, only
those things that are already owned by an individual
can be conveyed unto another, either as a _____ or in ______for other articles
gift or in
exchange
The practice of exchanging gifts among individuals
signified equality among men. Such direct exchange
devoid of the use of a medium came to be known as a
______
barter
Barter became inefficient when economic good being
offered in exchange were of quite different values.
More so, when they were ______.
indivisible
Adam Smith, in his book entitled “___________” Entertained the belief that money originated
in the man’s rational effort to meet the necessity of
finding some medium of exchange.
Wealth of Nations
_______ is responsible for increasing production and
adds to the creation of wealth.
Also, as a multiplier effect in economics sense
Money
However, in the beginning, the use of money was not
intended for production, rather, for _________,
which explains why the taking of interest on money
lent was not only looked-upon with disfavor but
actually forbidden
consumption
________, said in this connection: “Money is barren. It
does not breed.” As such, he concluded that it is
intended to be used only in exchange but not to
increase at interest.
Barrenness was to him an essential nature of money;
usury (interest) which made money bear fruit, was
unnatural
Aristotle
In due time, important modifications appeared in the
history of though governing interest. Of these
exceptions, the most important was the doctrine of
“_____ _______,” that is, suffering of a loss by the
lender. Where a delay (______) occurred in the
repayment of a loan, the lender was entitled to exact
conventional penalty
damnum emergens
mora
Still more important in helping to break down
the original prohibition was the doctrine relating to
“______ ______.” To have lost the chance of gain
through lending money also became a justification for
the receiving of interest
lucrum cessans
The Growing Need and Demand for Money
1.
The decline in the spiritual power of the church and the
eventual recognition of the institution of private
property. This led to the sanction of exchange provided
there was a fair exchange. This brought about the birth
of that dictum—“______ ______” which in economics
means the doctrine of the “just price.
justum pretium
The fall of feudalism and the rise of mercantilism.
Under mercantilism, gold and silver were equated with
the wealth of nation, so much so that national
commercial policy was aimed and directed towards the
acquisition of gold and silver which then were held
synonymous with ______
money
The fact however that the supply of money in many
instances could not adequately meet the increasing
volume of goods entering the exchange transaction
accounted for money being supplemented by the use of
______
credit
One of the unique features of our business system is
that it operates to a large extent on promises, called
_______.
The word credit comes from the Latin word credere,
which means “______.” The widespread use of credit is
a strong evidence to support the belief that the people
have trust in one another
- credit
- to trust
The emergence of credit might be helpful to point
out that it is not one design, rather a product of
______. Thus, as may be logical to expect, it passed
through a long process of evolution and development
necessity
A credit transaction involves two parties—____- and ______
• Insofar as the ____ is concerned, credit to him represents
power—the ability to obtain goods without in actual tender
of payment.
- creditor and debtor.
- debtor - concerned ; credt - power
The _____, as a seller of goods or services on credit, has
both the moral and legal right to demand of his debtor to
pay the obligations when due
The creditor
Credit is essentially a transfer of goods, services, or
funds giving rise to ______ that must be
discharged in the future
Obligations
In banking, credit is held refer to “___________,” that is, for the deposits made by the latter.
an entry in the books of a bank showing its obligation to a customer
In _______, credit is “an entry showing that the person named has a right to demand something but not necessarily money.”
In bookkeeping
In commerce, credit pertains to “________.”
an exchange transaction
