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From Barter to Money – Class 7 Social Science notes, important questions and MCQs

NCERT Class 7 Social Science, chapter 11. Notes, key terms, important questions with answers and MCQs.

Chapter overview

Before money, people exchanged goods directly through barter, which needed a double coincidence of wants. Gradually commodities such as grain and cowrie shells, then metal coins, paper money and now digital money came into use. Money makes exchange easier, measures value and helps people save.

Barter and its problems

Barter means exchanging one good for another without money.
It needs a double coincidence of wants: each person must want what the other has.
It is hard to divide goods, compare values and store wealth under barter.

Evolution of money

Commodity money: grain, cattle, salt and cowrie shells were used in many places.
In India, punch-marked coins of silver appeared around the 6th century BCE; later rulers such as the Kushanas and Guptas issued gold coins.
Paper money came later; in India the Reserve Bank of India (set up in 1935) issues currency notes.
Today, digital money through cards, net banking and UPI is widely used.

Functions of money

Medium of exchange, measure of value (prices), store of value (saving) and standard of deferred payment (loans).
Money must be accepted by everyone and backed by the government to be trusted.

Key terms

Barter: direct exchange of goods without using money
Double coincidence of wants: a situation where each party wants what the other has
Commodity money: goods such as grain or shells used as money
Digital money: money held and transferred electronically, as in UPI and cards

Important questions with answers

What is the double coincidence of wants?2 marks

Double coincidence of wants is a situation in barter where each person must have what the other wants and want what the other has. For example, a farmer with wheat who wants shoes must find a shoemaker who wants wheat, which is often difficult.

How has money changed over time?3 marks

At first people used barter. Then commodities such as grain, cattle, salt and cowrie shells served as money. Metal coins followed; in India, punch-marked silver coins appeared around the 6th century BCE and later rulers issued gold coins. Paper money came next, and today digital money through cards, net banking and UPI is common.

Explain the problems of barter and the functions of money.5 marks

Barter has several problems. It needs a double coincidence of wants, which is hard to find. There is no common measure of value, so it is difficult to decide how many pots equal one bag of rice. Many goods cannot be divided, for example a cow cannot be split to buy small items, and goods such as grain or vegetables spoil, so wealth cannot be stored easily. Money solves these problems. As a medium of exchange, it is accepted by everyone for buying and selling. As a measure of value, it expresses the price of every good in the same unit. As a store of value, it lets people save today and spend in the future. As a standard of deferred payment, it makes it easy to borrow and repay loans. Because money is issued and backed by the government, people trust and accept it.

Quick revision

Barter needs double coincidence of wants.
Commodity money → coins → paper → digital.
Punch-marked coins about 6th century BCE.
RBI issues currency; UPI is digital money.

Exam tips

Give one example to show the problem of barter: a potter who wants rice must find a rice farmer who wants pots.
Learn the four functions of money in order.

Practice MCQs

Exchanging goods directly without money is called
1. banking
2. saving
3. trade by cheque
4. barter
Show answer
Answer: (d) barter. It was the earliest form of exchange.
Currency notes in India are issued by the
1. State Bank of India
2. Reserve Bank of India
3. Supreme Court
4. Parliament
Show answer
Answer: (b) Reserve Bank of India. The RBI was set up in 1935.
Cowrie shells used as money are an example of
1. commodity money
2. digital money
3. paper money
4. credit cards
Show answer
Answer: (a) commodity money. Goods were used as a medium of exchange.
The main problem with barter is the need for
1. a bank account
2. written records
3. gold coins
4. double coincidence of wants
Show answer
Answer: (d) double coincidence of wants. Both persons must want each other's goods.
The earliest coins found in India are
1. punch-marked coins
2. gold dinars
3. paper notes
4. plastic cards
Show answer
Answer: (a) punch-marked coins. They date from around the 6th century BCE.
When money is used to express the price of goods, it acts as a
1. store of value
2. barter
3. standard of deferred payment
4. measure of value
Show answer
Answer: (d) measure of value. Prices compare values easily.
Which function of money allows a person to save today and spend later
1. medium of exchange
2. double coincidence
3. measure of value
4. store of value
Show answer
Answer: (d) store of value. Money keeps value over time.
Why is money accepted by everyone
1. it is heavy
2. it is always made of gold
3. it is backed by the government and trusted as a medium of exchange
4. it never changes value
Show answer
Answer: (c) it is backed by the government and trusted as a medium of exchange. Trust and legal backing make it acceptable.

All chapters of Class 7 Social Science

Written by Kundali IQ from standard, well-established facts to help with revision. This is not an official NCERT publication; always read your textbook too.