Basic Functions of Money
Class 7 Social Science · Chapter 11: From Barter to Money · NCERT Exploring Society: India and Beyond section 11.3
Learn
As trade grew over longer distances, people needed a common medium of exchange, and money came into being. When everyone accepts it, money moves along a chain: your parents pay the shopkeeper, who pays workers, who buy groceries and pay school fees.
Money is also a store of value: unlike wheat, it does not rot, so the farmer can save it and spend later. It is a measure of value: prices let us compare a ₹100 book with a ₹10 pen. And it is a standard of deferred payment: Zoya wants a ₹100 book but has ₹50, so the shopkeeper agrees she can pay the rest next week. Loans repaid in instalments work the same way.
Explore: what is money doing here?
- Sort each use.
Remember
- Money is a medium of exchange, a store of value and a measure of value.
- It is also a standard of deferred payment, letting people pay later.
Quick check
Saving money to spend next year shows money as a …
- store of value
- measure of value
- barter good
- minted coin
Answer
store of value. Money keeps its value over time, unlike wheat.
Think about it
Why does money only work if everyone trusts and accepts it?
One answer
A note is just paper; it buys things only because shopkeepers, workers and others agree to accept it, trusting they can use it in turn.
Practice
Practise with fresh questions at three levels (easy, medium, hard), some answered hands-on, with hints and worked answers. Get 4 of your last 5 right to finish the topic.