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Evolution of Money (ESSAY)

The document discusses the evolution of money through six stages: 1) Barter - the earliest form of exchange where goods and services were directly traded without a common medium. This system was difficult due to a lack of acceptance. 2) Commodity money - commodities like grains, alcohol and cocoa beans emerged as a common medium of exchange but transporting them was a problem. 3) Metallic money - precious metals like gold and silver were used but measuring value was difficult, so coins were introduced though transporting and storing coins also posed issues.

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Quynh Anh Hoang
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175 views3 pages

Evolution of Money (ESSAY)

The document discusses the evolution of money through six stages: 1) Barter - the earliest form of exchange where goods and services were directly traded without a common medium. This system was difficult due to a lack of acceptance. 2) Commodity money - commodities like grains, alcohol and cocoa beans emerged as a common medium of exchange but transporting them was a problem. 3) Metallic money - precious metals like gold and silver were used but measuring value was difficult, so coins were introduced though transporting and storing coins also posed issues.

Uploaded by

Quynh Anh Hoang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Evolution of money

Good morning everyone! We are from team 7. Our team has 2 members: I’m
Hoang Thi QA and my teammate Dang Minh Phuong. Our lesson today is about
economics. As you know money plays an important role in operation of
economics. So today we gonna talk about the Evolution of money. Our
presentation is devided into three parts. Firstly, I'd like to look at introduction of
money and its function. Secondly, I’ll talking about different stages of evolution
of money. Finally, I'll be looking at Characteristics of money.
Let’s begin. What does money signify? Acoording to..
Money is something we all take for granted, but without it life would be quite
different.
Think what life would be like in a barter economy, a moneyless economy that
relies on trade. According to Professor D.H. Robertson money defines as
“anything which is widely accepted in payment for goods or in discharge of
other kinds of business obligations.”

Lets move on some functions of money. There are 3 main functions

Medium of Exchange
Something that buyers will exchange with a seller when they want to purchase
goods or services from the seller
I will give you an exapmle. The person who bought 1 kg of rice and is priced at
$4. So, here the currency acts as a medium of exchange. It determines the value
of the goods.
The next function is
Measure of Value: a common denominator that can be used to express worth

Store of Value: money is considered as commodity, currency..


allows purchasing power to be used over time
Now we are having 100 dollars, and if we don’t spend it now, in the future it will still keep its
value as present.

As you know Evolution of Money is probably one of the biggest


invention in human history.The money was not invented but it
evolved with passage of time according to the changing requirements
of economies.It is not a result of brain storming of some economist
rather there is a long process of evolution since start of civilization to
this modern complicated credit system.
It is generally believed that evolution of money has passed through
following six stages.

Barter
Commodity Money
Metallic Money
Paper Money
Credit Money
Electronic Money
These stages of evolution of money are discussed as under.

1 Barter.

In the beginning of civilization the needs of people were very limited


and therefore they used to Exchange their goods with other people’s
goods or Service. Let’s look at 3 pictures. We can see the bartering
transaction in the past. In the first picture a man standing on the left
has a piece of cloth, which is used to exchange a chicken from the
man with glasses. And after this trade they are satisfied. From this
example we can know that barter is a system of exchange where
goods and services are directly exchanged for each other without the
use of money. There were many difficulties associated with barter
system like the acceptance of two parties involving this transaction.
So gradually this system of exchange was replaced with money
system of exchange.

2 Commodity Money:

Money is in fact discovered to remove Difficulties of barter. In fact


money has evolved in response to the urgent needs of the various
stages of economic growth. In the beginning of civilization alcohol,
cocoa beans.. , have been used as money in different
Further the volume of trade remained very limited due problem of
transportation of commodity money.

3 Metallic Money.

Money made of metal is called metallic money. In the beginning the


pieces of gold and silver were used as money but it did not solve the
complicated problems of exchange. It was very difficult to measure
the value with these jaw pieces of metal. Another problem was
transportation and storage of precious metals. This problem was
solved by making standardized coins. In the beginning full bodied
coins of gold and silver were introduced but later on these were
replaced with token coins. Now a day’s different alloy are being used
for minting of coins.

The metallic coins have a specific weight and shape. Coins are only
used for smaller retail payments because it is difficult to count,
transport and store them. Do you remember what is it?

The next part is presented by Dang Minh Phuong

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