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WEEK 4
TOPIC: MONEY
Content
- Definition and meaning of money
- Historical development of money
- Functions of money
Sub-Topic 2: Definition and Meaning of Money
Money may be defined as anything that is generally acceptable as a medium of exchange for making payments, settlement of debts or other business obligations. Before the introduction of money, the type of exchange that took place was trade-by-barter.
TRADE BY BARTER
Definition: Trade by barter may be defined as direct system and practice of exchanging goods for goods and services for services.
PROBLEMS/DIFFICULTIES/ DISADVANTAGES OF TRADE BY BARTER
- The difficulty of double coincidence of wants
- It wastes time and energy
- Difficulty in assessing the value the value of commodities
- Exchange become uninteresting and unexciting
- It does not encourage large quantity and variety purchases
- It does not encourage deferred payment
- It does not encourage installment payments
- It does not encourage division of labor
- There is no lending and borrowing
- It discourages large scale production
- Miscellaneous problem: These difficulties include: the non-durability, portability, divisibility, homogeneity; of the commodities that were used in exchange under trade by barter.
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