Purpose Of Money Flashcards
The historical use of money?
The Earlier currencies included copper rings, beads, cocoa beans and even axes. In Asia, Africa, Europe and Australia, humans used rare cowrie seashells as tokens of value. People could now store their wealth easily and use it as payment when needed.
Advantages or benefits of bartering?
The advantages of barter system is that there are no complexities involved unlike monetary system, power will not be concentrated in some circles so that there will not be problems of balance of payments crisis or foreign exchange crisis
Disadvantages of bartering?
Disadvantages of the barter system is inability to make deferred payments or difficulty in storage of goods, lack of double coincidence of wants.
Intrinsic Value?
Intrinsic value is the measure of what an item is worth
What types of goods or commodities are traded today that have intrinsic value?
Commodity money, such as gold or silver, has intrinsic value because it has utility or usefulness in many of the applications beyond use in money. For example, gold has intrinsic value because it is used in jewellery, electronics, and other industrial applications.
Current Gold Price per ounce
£1,581.27
Calculate Price per Ton
£41,517,000
Amount of gold the Bank of England holds in Tons
approximately 310 tonnes
Why is the island of Yap significant in the history of money? Explain your answer so you discuss how and why.
Yap teaches us some important lessons on the functions of money. That is because money on the island consists of large stone discs, made from limestone, and shipped from an island a few hundred miles off the coast of Yap, called Rai.
Which country developed the idea of paper notes? Explain your answer so you discuss how and why.
The first recorded use of paper money was purported to be in the country of China during the 7th century A.D. as a means of reducing the need to carry heavy and cumbersome strings of metallic coins to conduct transactions.
Explain what the use of Rai stones are in the history of money. Explain your answer so you discuss how and why.
This stone ring is money from the Pacific Island of Yap. It weighs 168.5 pounds and is not intended to circulate like a coin. Instead, its use has been reserved for significant or ceremonial payments, such as dowries.
3 items with intrinsic value that have been used as money
Gold coins, corn, and cigarettes are perfect examples of commodity money since they hold intrinsic value.
2 key limitations of a system of barter
The inability to make deferred payments
the lack of a standard measure value
an sentence to explain in your own words the purpose of money
The purpose of money is to be able to make payments to the owner an item that we want to buy.
