You don’t need to barter if you have

coinsCitizenship: Introduction to Economics

About the Unit

• In the Introduction to Economics Unit we will be exploring the following questions:

• Why do we have private property?

• Why do we have money (currency)?

• What is inflation?

• How does money and goods flow between producers and consumers?

• Why are some goods/services more expensive than others?

• How the economy can be measured?

Function of money...

• With barter (trading stuff) a person can only exchange with someone who wants what he or she has to offer BUT you don’t need to barter if you have coins.

• With money an individual can buy from anyone who is willing to sell

• With money a seller can sell to anyone who wants what the seller has

• Money can be held until the time is right to buy

• Money helps us measure the value of things

• There are two types of money...

• Commodity - Money that has intrinsic value in and of itself (like gold)

• Fiat - Money that is simply a token of exchange and only represents the value of something else (like dollars).

Bartering means you can only exchange if you have what they want and they have

what you want

BUT With money you don’t need to barter

BECAUSE

You can buy from anyone who will sell

You can sell to anyone who

will buy

You can hold money until its the right time

to buy

Money helps you measure the value of

things

Historical Examples

• 3000BCE - In Mesopotamia (modern-day Iraq) the “shekel is used as a unit of money: a unit of barley of a certain weight equals a certain value of gold or silver.

• 700BCE - The oldest known coins are made in Greece on the island of Ageina

• 13th Century (1200’s) - Kublai Khan adopts flat money in the Mongol Empire.

• 13th Century (1200’s) - Marco Polo brings “promissory notes” from China to Europe, where they are used by Italian Bankers.

• 1696 - The Banks of Scotland is the first commercial operation to issue “bank notes.”

• 1971 - President Nixon cancels the conversion of the US Dollar to gold

Summary

• With barter (trading stuff) a person can only exchange with someone who wants what he or she has to offer BUT you don’t need to barter if you have coins.

• There are two types of money, commodity and fiat. Commodity is money that is valuable in and of itself and flat money is money that only represents the value of something else.