1. `
BARTER SYSTEM
AND
EVOLUTION OF MONEY

2. CONTENTS Barter System Benefits of Barter System
Difficulties in Barter System
Development of Money
Money
Functions of Money

3. In ancient days, man’s wants were very few.
BARTER SYSTEM
In ancient days, man’s wants were very few.

4. BARTER SYSTEM
As time Passed, his wants multiplied and his self-sufficiency disappeared.

5. BARTER SYSTEM
He began to exchange some of the things he produced for those which neighbours possessed.

6. BARTER SYSTEM
Such direct exchanges of goods or services, without the use of money, are called Barter.

7. BENEFITS OF BARTER SYSTEM
It is the simplest form of exchange.

8. BENEFITS OF BARTER SYSTEM
It plays a valuable role in maintaining harmonious relationship among the members of the community.

9. BENEFITS OF BARTER SYSTEM
Barter ensures need based production as under this system, only those goods are produced that are required by the community.

10. DIFFICULTIES IN BARTER SYSTEM
I have banana to exchange with apple.
Lack of Double coincidence
of wants.
But I want rice.

11. DIFFICULTIES IN BARTER SYSTEM
Lack of Double coincidence
of wants.
Lack of common measure of
value.

12. DIFFICULTIES IN BARTER SYSTEM
Lack of Double coincidence
of wants.
Lack of common measure of
value.
Difficulty in transportation
of commodities.

13. DIFFICULTIES IN BARTER SYSTEM
Lack of Double coincidence
of wants.
Lack of common measure of
value.
Difficulty in transportation
of commodities.
Capital or wealth cannot be
stored as goods lack
durability.

14. Today, we cannot think of life without money.
DEVELOPMENT OF MONEY ` ` ` ` ` ` ` ` ` ` ` ` ` ` `
Today, we cannot think of life without money.

15. DEVELOPMENT OF MONEY
Animal Skin
Metal Coin
Grains
Paper Money
Different commodities, varying with the conditions of time and place have served as money, with varying successes.

16. MONEY ` ` ` ` ` ` `
Anything that is generally acceptable as a means of exchange and that at the same time acts a measure and as a store of value is Money.

17. MONEY Money = Metallic Money Metallic Money + Legal Tender Money
+ Credit Instruments
Credit Instruments

18. FUNCTIONS OF MONEY Primary Functions Medium of Exchange
Measure of Value

19. FUNCTIONS OF MONEY Primary Functions
Medium of Exchange
In the modern exchange system money acts as the intermediary in sales and purchases. The prices of goods and services are expressed in terms of money.
Primary Functions
Medium of Exchange
Measure of Value

20. FUNCTIONS OF MONEY Primary Functions
Measure of Value
All goods and services are valued in money. Thus, we can say how much of one commodity is equal to how much of another commodity.
Primary Functions
Medium of Exchange
Measure of Value

21. FUNCTIONS OF MONEY Secondary Functions Store of Value
Transfer of Value
Standard of
Deferred Payment

22. FUNCTIONS OF MONEY Secondary Functions
Store of Value
Savings are done in terms of money which is more permanent than commodity. Capital formation, which is an essential condition of economic growth, has become possible with the invention of money.
Secondary Functions
Store of Value
Transfer of Value
Standard of
Deferred Payment

23. FUNCTIONS OF MONEY Secondary Functions
Transfer of Value
Due to the general acceptability of money, purchasing power can be transferred from one person to another from place to place and time to time.
Secondary Functions
Store of Value
Transfer of Value
Standard of
Deferred Payment

24. FUNCTIONS OF MONEY Secondary Functions
Standard of
Deferred Payment
Since value of money is more stable in comparison to other commodities, money now acts as the standard of deferred payments.
Secondary Functions
Store of Value
Transfer of Value
Standard of
Deferred Payment
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