Hinglish

Why Do We Need Money?

Class 7 Social Science · Chapter 11: From Barter to Money · NCERT Exploring Society: India and Beyond section 11.2

Learn

Imagine Kabir is a farmer in a barter village. He needs shoes, a sweater and medicine for his grandmother, but all he can spare is an ox. He must find someone who wants an ox and has what he needs: a double coincidence of wants, which is rare. Even then, how many shoes is an ox worth? There is no common measure of value. He cannot give a quarter of an ox for a sweater (divisibility), dragging an ox around is hard (portability), and if he swaps it for wheat, the wheat may rot or be eaten by rats (durability).

Barter has not disappeared. At the Junbeel Mela in Assam, held since the 15th century when chiefs of the Tiwa, Karbi, Khasi and Jaintia communities met, hill people still trade roots, herbs, spices and handmade crafts for rice cakes from the plains. Book-swap clubs and vendors who give new utensils for old clothes are barter too.

Explore: the problems of barter.

  1. Sort each problem.

Remember

  • Barter suffers from double coincidence of wants and no common measure of value.
  • Goods may not be divisible, portable or durable; barter survives in places like the Junbeel Mela.

Quick check

Finding someone who has what you want and wants what you have is called …

  1. double coincidence of wants
  2. divisibility
  3. durability
  4. minting
Answer

double coincidence of wants. Money removes the need for it.

Think about it

Which problem of barter do you think money solves best? Why?

One answer

Most would say the double coincidence of wants: with money you can sell to anyone who wants your goods and buy from anyone who has what you need.

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.