What is financial infrastructure?

The network of banks, payment systems and stock markets that helps manage money

What are the main things a bank does?

Holds deposits and lends money as loans

How do banks make money?

They pay lower interest on deposits and charge higher interest on loans

Earning interest on previous interest as well as on the original amount

What is meant by a double coincidence of wants?

It is a situation where two people each have exactly what the other wants and are both willing to exchange them directly, which is often hard to find under barter.

Why is a common standard measure of value needed?

Without one it is difficult to compare the value of one good against another and decide a fair proportion for exchange, so one party may feel the exchange is unfair and refuse it.

What were ancient Indian coins like?

They were made of precious metals like gold, silver and copper or their alloys, called karshapanas or panas, and bore punched symbols called rupas.

When and where was paper money first used, and when did it reach India?

Paper money was first used in China and was introduced in India in the late 18th century.

Who controls the issue of currency in India today?

The Reserve Bank of India (RBI) controls the issue of currency, and it is not legal for anyone other than the RBI to issue currency.

What new forms of money are used today?

Intangible digital money in electronic form, used through debit cards, credit cards, net banking and UPI, often via a QR code scanned with a mobile phone.

Give an example of a barter tradition that still survives.

The Junbeel Mela, a three-day annual fair at Junbeel in Assam, where tribal communities still exchange produce and goods through barter.

CBSE · NCERT syllabus

CBSE Class 7 — Notes, Chapters & Practice Quizzes

Q: What is the barter system?

It is a way of exchanging goods and services directly for other goods and services without using money, the earliest form of exchange.

Q: What problems of barter does the farmer's story show?

The need for a double coincidence of wants, the lack of a common standard measure of value, and the problems of divisibility, portability and durability.

Q: What are the basic functions of money?

It serves as a medium of exchange, a standard of deferred payment, a store of value, and a common measure that lets the value of goods and services be compared.

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Chapter 11: From Barter to Money — Class 7 Social Science

Social Science · 20 chapters

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Chapter 11: From Barter to Money

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What is the barter system?

Summary

This chapter traces how exchange evolved from barter to modern money. In the barter system people exchanged goods or services directly for other goods or services, using commodities like cowrie shells, salt, cattle and seeds. Through the example of a farmer who has only an ox to trade for shoes, a sweater and medicines, the chapter reveals barter's limitations: the need for a double coincidence of wants, the lack of a common standard measure of value, and the problems of divisibility, portability and durability. Because of these difficulties, money emerged as a common medium of exchange that everyone accepts. The chapter describes the basic functions of money — a medium of exchange, a standard of deferred payment, a store of value and a common measure of value. It then follows the journey of money in India through a timeline: from barter and cowrie shells to metal coinage (the ancient karshapanas or panas with punched symbols called rupas), to official paper money introduced in the late 18th century and controlled today by the Reserve Bank of India, and finally to new digital forms such as debit cards, credit cards, net banking and UPI using QR codes. It notes that some barter traditions, like the Junbeel Mela in Assam, still survive.

The barter systemLimitations of barterFunctions of moneyThe journey of coins and paper moneyNew forms of digital money

Key terms

Barter system

A way of exchanging goods and services directly for other goods and services without using money.

Double coincidence of wants

A situation where two people each have exactly what the other wants and are willing to exchange them directly — a key difficulty of barter.

Money

The common tool that everybody accepts and uses to make or receive payments in exchange for goods and services.

Standard of deferred payment

A function of money that lets payments be made later, since money is accepted as a way to settle debts over time.

Karshapana (pana)

Ancient Indian coins made of precious metals, bearing punched symbols called rupas, issued by rulers.

Reserve Bank of India

The central authority that controls the issue of currency in India; it is not legal for anyone else to issue currency.

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A way of exchanging goods and services directly for other goods and services without using money.

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Practice quiz · From Barter to Money

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From Barter to Money

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