Class 7 CBSE – Chapter 11: From Barter to Money

2-Mark Questions and Answers

Q1. What is the barter system?

Answer: The barter system is a system in which people exchange goods or services directly for other goods or services without using money.

Q2. What is meant by “double coincidence of wants”?

Answer: It is a situation in which two people each possess something that the other person wants and are willing to exchange them directly.

Q3. Mention any two limitations of the barter system.

Answer:

1. It requires a double coincidence of wants.
2. There is no common standard measure to compare the value of different goods.

Q4. Why did people need money?

Answer: People needed money because barter became difficult as trade increased. A common medium of exchange made buying and selling easier.

Q5. What is meant by portability? How was it a problem in barter?

Answer: Portability means the ability to carry or move something from one place to another. In barter, large goods such as an ox or bags of wheat were difficult to carry from place to place.

Q6. What is durability?

Answer: Durability is the ability of an object or material to last for a long time and withstand damage. Goods such as wheat could spoil or be damaged, creating a problem in barter.

Q7. What is a medium of exchange?

Answer: A medium of exchange is something commonly accepted by people for buying and selling goods and services. Money serves as a common medium of exchange.

Q8. Name any two forms of modern digital payment.

Answer: Two forms of modern digital payment are UPI and debit cards. Other methods include credit cards and net banking.

Q9. Who controls the issue of currency in India?

Answer: The Reserve Bank of India (RBI) controls the issue of currency in India. No other person or institution is legally allowed to issue currency.

Q10. What is digital money?

Answer: Digital money is money in electronic form that cannot be physically touched or felt. It is used through methods such as UPI, net banking, debit cards and credit cards.

3-Mark Questions and Answers

Q1. Explain any three limitations of the barter system.

Answer: The barter system had several limitations:

1. Double coincidence of wants: Both persons had to want each other’s goods.
2. Lack of a common measure of value: It was difficult to decide the fair value of different goods.
3. Problems of divisibility, portability and durability: Some goods could not be divided, were difficult to carry, or could spoil over time.

Q2. Explain the three basic functions of money.

Answer: Money performs the following basic functions:

1. It acts as a medium of exchange for buying and selling goods and services.
2. It acts as a measure of value, allowing comparison of prices.
3. It acts as a store of value, as it can be saved and used for future purchases.

Q3. How did money solve the problems of the barter system?

Answer: Money solved barter-related problems by:

1. Eliminating the need for a double coincidence of wants.
2. Providing a common standard for measuring the value of goods and services.
3. Being easier to carry, divide, store and use for future transactions.

Q4. Describe the evolution of money over time.

Answer: Money evolved from:

1. Barter and commodities such as cowrie shells.
2. Metal coins made from metals such as iron, silver, gold and copper.
3. Paper and digital money, including cards, net banking and UPI.

Q5. Why were coins introduced as a form of money?

Answer: Coins were introduced because they provided a more convenient and commonly accepted medium of exchange. Rulers issued coins for transactions, and the coins of powerful rulers were sometimes accepted across different kingdoms, helping trade over larger areas.

Q6. Why did paper money become necessary?

Answer: Paper money became necessary because:

1. Carrying a large number of coins was difficult.
2. Storing large quantities of coins was inconvenient.
3. Paper currency provided a more suitable alternative, especially for higher-value transactions.

Q7. What is the importance of the Junbeel Mela?

Answer: The Junbeel Mela is an important socio-cultural event where the traditional practice of barter continues. People exchange local products, handmade goods and forest products for items such as food from other regions.

5-Mark Questions and Answers

Q1. Explain the major limitations of the barter system.

Answer: The barter system was useful in early times, but it had several important limitations:

1. Double coincidence of wants: A person had to find someone who wanted exactly what they offered and also had what they needed.
2. No common standard of value: It was difficult to decide how much of one good should be exchanged for another.
3. Problem of divisibility: Some goods, such as an ox, could not be divided into smaller parts for smaller purchases.
4. Problem of portability: Large or bulky goods were difficult to carry from one place to another.
5. Problem of durability: Some commodities, such as wheat, could spoil or be damaged during storage.

Therefore, these difficulties led to the development of money as a more convenient medium of exchange.

Q2. Describe the basic functions of money.

Answer: Money performs several important functions in economic life:

1. Medium of exchange: It is accepted for buying and selling goods and services.
2. Measure of value: It provides a common unit for measuring and comparing the value of different goods and services.
3. Store of value: Money can be kept safely for future use and purchases.
4. Standard of deferred payment: It allows payments to be made at a later date.
5. Facilitates transactions: The same money can move from one person to another and be used for different economic activities.

Thus, money makes economic transactions easier, faster and more convenient than barter.

Q3. Trace the journey of money from barter to digital payments.

Answer: The journey of money has taken place through different stages:

1. Barter system: People directly exchanged goods and services without using money.
2. Commodity money: Items such as cowrie shells, salt, tea, tobacco and cattle were used in exchange.
3. Metal coins: Coins made of gold, silver, copper, iron and their alloys became widely used.
4. Paper currency: Paper money provided a convenient alternative when carrying and storing large quantities of coins became difficult.
5. Digital money: Today, technology has introduced electronic methods such as UPI, QR codes, debit cards, credit cards and net banking.

Thus, money has continuously evolved to make transactions easier and more convenient.

Q4. What were the salient features of ancient Indian coins?

Answer: Ancient Indian coins had several important features:

1. They were issued and controlled by rulers.
2. Different kingdoms had their own coinage.
3. Powerful rulers’ coins were sometimes accepted across different kingdoms, which facilitated trade.
4. Coins were made from precious metals such as gold, silver and copper, or from their alloys.
5. They carried symbols and motifs, including animals, trees, hills, rulers, queens and deities. Some coins were known as kārṣhāpaṇas or paṇas and had punched symbols called rūpas.

Q5. Explain how digital money has changed the way people make payments.

Answer: Digital money has made transactions quicker and more convenient:

1. People can make payments without carrying coins or currency notes.
2. Methods such as UPI, QR codes, debit cards, credit cards and net banking are widely used.
3. A customer can scan a QR code using a mobile phone and make a payment digitally.
4. The money can be transferred directly from one bank account to another.
5. Digital payments make everyday transactions more convenient and represent the continuing evolution of money.