Chapter 11: From Barter to Money
Big Questions: How did people exchange before money? Why did money arise? How did it evolve—from shells & coins to notes & digital UPI?
Grade 7 • Economics
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Comic Sans MS
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1) What is Barter?
Barter System = exchanging goods/services directly for other goods/services (no money). Example: swap an extra eraser for a pencil you need.
Global snapshots
- Rai stones (Yap, Micronesia) – huge stone discs used as “money”.
- Tajadero (Aztec copper “knife” money) – Mesoamerica.
- Tevau (red feather coils) – Solomon Islands.
Desi snapshots
- Cowries, salt, tea, tobacco, cattle, seeds often used to barter.
- Junbeel Mela (Assam): living barter fair among Tiwa, Karbi, Khasi, Jaintia communities.
Barter today?
- Book-swap clubs 📚
- Old clothes ↔️ utensils exchange
- Neighbourly skill swaps (help for help)
Key terms: Transaction, Commodities, Barter, Money.
2) Why did Money arise? — Problems with Barter
Imagine a farmer wants shoes, a sweater & medicines but only has an ox to spare. Pure barter creates many hurdles:
Double coincidence of wants: Both sides must want exactly what the other offers.
No common standard of value: How many bags of wheat for one sweater?
Indivisibility: You can’t give “half an ox” for a sweater!
Portability: Lugging wheat/ox around is hard.
Durability: Wheat can rot; pests can eat it.
Storage & safety: Storing bulky commodities is risky & costly.
Therefore: Society needed a commonly accepted tool for exchange → Money.
3) Basic Functions of Money
Core 4
- Medium of exchange – buy/sell smoothly.
- Unit of account – common measure of value; price comparison easy.
- Store of value – can be saved to buy later (unlike perishable wheat).
- Standard of deferred payment – pay part now, part later.
Try this: You have ₹50; book costs ₹100. If the shopkeeper lets you pay ₹50 now and ₹50 later, money is acting as a standard of deferred payment.
4) The Journey of Money (India — broad timeline)
Barter ➜ Cowries & commodities ➜ Metal coins (~600 BCE) ➜ Paper money (late 18th c.) ➜ Cards/ATMs ➜ Net banking ➜ UPI & QR (2016→)
4.1 Coinage (Metal Money)
- Minting: rulers issued coins; their acceptance spread trade across regions.
- Metals: gold, silver, copper; also alloys for strength.
- Early Indian terms: kārṣhāpaṇa / paṇa / pana. (Echoes today in paṇam—Tamil/Telugu/Malayalam; haṇa—Kannada.)
- Obverse/Reverse motifs: animals, trees, hills, deities, royal emblems (e.g., Chalukya Varāha, Chola tiger).
- Evidence of trade: Roman gold coins found in Pudukkottai (TN) → strong Indo-Roman trade; coins found in Kerala/TN show active maritime trade.
Fun fact: Pre-decimal units: 1 anna = 1/16 rupee. In 1947, one anna could buy a dozen bananas!
₹ symbol (2010): Designed by Udaya Kumar. Mix of Devanagari “र” + Roman “R” with two horizontal lines (flag stripes & “equals”).
4.2 Paper Money (Currency Notes)
- First used in China; came to India in the late 18th century.
- Coins = small denominations; notes = higher denominations.
- RBI (Reserve Bank of India) is the only legal issuer of Indian currency notes.
- Notes celebrate culture (reverse-side motifs) and include tactile marks for the visually impaired.
4.3 New Forms — Digital Money
- Cards: Debit/Credit; ATMs.
- Net banking, UPI, QR codes → instant bank-to-bank transfer. Even street vendors accept QR payments.
- Digital = intangible (electronic) but fully valid money.
Safety first: Keep UPI PIN secret, verify receiver name before paying, and use trusted apps only.
5) Living Barter Traditions (Culture & Community)
- Junbeel Mela (Assam): 500-year-old barter fair; roots, herbs, forest goods exchanged for rice foods; starts with Agni Puja.
- Book exchange clubs: swap read books for new stories.
- Old clothes ↔️ utensils: recycling & re-use economy.
Think: What makes barter work smoothly in such fairs? (trust, community rules, agreed values, repeated interactions)
6) Quick Recap (Before we move on…)
- Barter came first; many commodities worked as “proto-money”.
- Barter problems (double coincidence, divisibility, portability, durability) led to money.
- Money evolved: shells → coins → paper currency → digital payments.
- In India, RBI alone issues currency; coins/notes carry cultural motifs & security features.
- Digital rails (UPI/QR) make payments fast, cheap, and inclusive.
7) Glossary (Sweet & Short)
| Term | Meaning |
|---|---|
| Barter | Direct exchange of goods/services without money. |
| Double coincidence of wants | Each party must want what the other offers. |
| Unit of account | Common yardstick to price and compare goods/services. |
| Store of value | Ability to save purchasing power for future. |
| Deferred payment | Payment made later; money allows credit/instalments. |
| Minting | Manufacturing coins in a mint. |
| Alloy | Mix of metals to improve strength/durability. |
| Obverse/Reverse | “Head” side / “Tail” side of a coin. |
| RBI | Reserve Bank of India—issues notes; banker to banks. |
| UPI/QR | Digital systems that move money account-to-account instantly. |
8) Let’s Explore (Mini Activities)
- Value Detective: Check the reverse of ₹50 & ₹100 notes. Identify the heritage motifs and google their stories.
- Coin Hunt: Collect 5 coins from different years. Note metal feel, year, motifs, edge. What changed and why?
- UPI Safety Pledge: Write 3 rules you’ll always follow while paying digitally.
- Anna Math: If 1 rupee = 16 annas, how many annas = ₹3.5? Ans: 56 annas
9) Practice Corner (Matches the Chapter’s Questions)
- How does barter work? Name common barter commodities.
Direct exchange without money; commodities include cowries, salt, tea, tobacco, cloth, cattle, seeds, etc. - List limitations of barter.
Double coincidence, no standard value, indivisibility, portability, durability, storage/safety. - Salient features of ancient Indian coins.
Minted by rulers; precious metals/alloys; punch-marks/motifs; obverse/reverse designs; terms like paṇa; evidence of maritime trade. - How has money transformed?
Barter → shells/commodities → metal coins → paper notes (RBI) → cards/ATMs → net banking → UPI/QR digital money. - How could Indian coins become accepted across borders?
Stable metal content, trusted rulers, standard weights, wide trade networks, consistent motifs & acceptability. - Arthaśhāstra snippet: 60 paṇas/year ≈ one āḍhaka (~3 kg) grain/day; fine for not helping neighbour = 100 paṇas. ⇒ A paṇa had high value; the law promoted social responsibility.
Noodles = Notes + Doodles
You’ve got this! 💪
Chapter 11: From Barter to Money — Exercise Pack (with Answers)
Covers: Textbook exercises + One-word answers + Fill in the blanks + True/False + Very short & Short answers. Designed for easy mobile reading.
A) Textbook Exercise Questions — Answers
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How does the barter system take place and what kinds of commodities were used?
In barter, people directly exchange goods/services without money when both parties want what the other has. Common barter commodities included cowrie shells, salt, tea, tobacco, cloth, cattle, seeds and other everyday produce.
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What were the limitations of the barter system?
(i) Double coincidence of wants, (ii) no common standard of value, (iii) indivisibility of some goods, (iv) poor portability, (v) low durability/perishability, and (vi) storage/safety issues.
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What were the salient features of ancient Indian coins?
Issued by rulers; made of precious metals/alloys (gold, silver, copper); known as kārṣhāpaṇa/paṇa; carried punch-marks/motifs on obverse & reverse (animals, deities, emblems); standard weights aiding trade; finds like Roman coins in Tamil Nadu show active maritime trade.
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How has money as a medium of exchange transformed over time?
Barter → commodity money (cowries, salt) → metal coinage (~600 BCE) → paper currency (late 18th c. in India) → plastic cards/ATMs → net-banking → digital payments via UPI/QR. Through each stage money became easier to carry, store and standardise.
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What steps might have been taken so Indian coins became accepted across countries?
Standard metal purity & weights; clear royal symbols & consistent minting; wide circulation through trade routes; political stability; agreements with foreign merchants; reliable scales and assays at ports; penalties against debasement/counterfeiting.
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Arthaśhāstra lines: 60 paṇas/year ≈ 1 āḍhaka (~3 kg) grain per day. What does this show about value of one paṇa? Fine for not helping neighbour was 100 paṇas — what value does this promote?
60 paṇas ≈ 365 āḍhakas ⇒ 1 paṇa ≈ 6.08 āḍhakas ≈ ~18.25 kg grain — showing high purchasing power. A 100-paṇa fine (greater than annual salary) strongly incentivised social duty, mutual aid and community welfare.
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SKIT (cowries as money):
Suggested script outline: Scene 1: Barter chaos (no double coincidence). Scene 2: Village elder proposes cowries—portable, divisible, durable. Scene 3: Market stall signs prices in cowries; disputes drop. Scene 4: Rules—standard shell size/weight, no broken shells, common measures. Outcome: smoother trade.
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RBI & security features of notes (sample findings):
Watermark (Mahatma Gandhi & numeral), security thread, see-through register, micro-lettering, intaglio (raised) printing, latent image, optically variable ink (₹500/₹2000 legacy), colour-shift thread, fluorescence under UV, accurate serial numbers, tactile marks for visually impaired.
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Interview on cash vs UPI — sample summary:
Many shopkeepers prefer UPI for speed, exact amounts, no change handling, and easy records; some prefer cash for network outages or tiny purchases. Families mix both—elders often cash-first; youth/urban users favour UPI for convenience and safety.
B) One-Word Answer Questions (10)
- Direct exchange of goods for goods is called ______. Ans: Barter
- The sole authority issuing Indian currency notes: ______. Ans: RBI
- UPI stands for ______. Ans: Unified Payments Interface
- The “head” side of a coin is the ______. Ans: Obverse
- A mixture of metals is an ______. Ans: Alloy
- Barter requires a double ______ of wants. Ans: Coincidence
- Ability to carry easily is ______. Ans: Portability
- Ability to split into smaller units is ______. Ans: Divisibility
- Ancient Indian coin was called ______ / ______. Ans: Kārṣhāpaṇa / Paṇa
- First regular paper money was used in ______. Ans: China
C) Fill in the Blanks (10)
- In barter, goods are exchanged for ______. Ans: goods/services
- A common yardstick for prices is called the ______ of account. Ans: unit
- One anna was equal to ______ of a rupee. Ans: 1/16
- The two sides of a coin are the ______ and the ______. Ans: obverse, reverse
- Paper currency in India today is issued only by the ______. Ans: Reserve Bank of India
- Digital payments by scanning a square image usually use a ______ code. Ans: QR
- Coins often used ______ to make them stronger. Ans: alloys
- Money kept for future purchases shows the function “store of ______.” Ans: value
- Finding someone who wants exactly what you offer is the double ______ of wants. Ans: coincidence
- The ₹ symbol was officially adopted in the year ______. Ans: 2010
D) True/False with Explanations (10)
- Barter requires a double coincidence of wants. — True
Because both parties must want each other’s goods at the same time. - Wheat is an excellent long-term store of value. — False
It is perishable; can rot or be eaten by pests. - Any scheduled bank can legally print currency in India. — False
Only the RBI issues currency notes. - Paper money was used in India before metal coins. — False
Metal coins predate the arrival of paper currency. - UPI is a digital method to transfer money between bank accounts. — True
- The obverse is the tail side of a coin. — False
Obverse is the head; reverse is the tail. - All coins are made only from pure metals, never alloys. — False
Alloys are common for strength/durability. - Money helps compare values of different goods. — True
It acts as a unit of account. - One anna equalled one-tenth of a rupee. — False
It equalled 1/16 of a rupee. - Roman coins found in Tamil Nadu suggest ancient overseas trade. — True
E) Very Short Answer Questions (2–3 lines each) — 10
- Define money and write two functions.
Money is a commonly accepted medium of exchange. It serves as (i) a medium of exchange and (ii) a unit of account; it also acts as store of value and standard of deferred payment. - State two limitations of barter.
Needs double coincidence of wants; lacks a common standard of value, making fair pricing hard. - What do motifs on ancient coins tell us?
They reveal rulers, deities, symbols and trade links—helping date coins, identify regions, and infer economic contact. - Why did paper currency become necessary?
Large payments in coins were heavy to carry/store; notes solved portability, storage and counting issues. - Give two examples of living barter.
Junbeel Mela (Assam) exchanges produce; household old-clothes-for-utensils swaps. - What is the obverse and reverse of a coin?
Obverse is the “head” side; reverse is the “tail” side—both carry distinct designs. - Explain “store of value”.
Money can be saved now and used later without losing value quickly, unlike perishable goods. - Who issues Indian currency notes?
The Reserve Bank of India (RBI) is the sole issuer. - What is UPI?
Unified Payments Interface—an instant, bank-to-bank digital payment system using VPA/QR. - Why were alloys used in coins?
To improve hardness, durability and reduce wear, while controlling cost and purity.
F) Short Answer Questions (3–4 lines each) — 10
- Explain how money solves the double coincidence problem.
With money, you don’t need the seller to want your good; you pay in a universally accepted medium, breaking the need for mutual wants. - Describe the evolution of money in India in brief.
From barter and commodity money to metal coins (~600 BCE), paper currency (late 18th c.), then cards/ATMs, and now UPI/QR digital payments. - How do security features protect currency?
Watermarks, threads, micro-text, intaglio print and colour-shift elements make counterfeiting difficult and help the public verify notes. - Give evidence that Indian regions traded overseas in ancient times.
Finds of Roman gold coins in Pudukkottai and coins along Kerala/TN coasts indicate active maritime trade networks. - Why is money a better store of value than wheat?
Money doesn’t rot or get eaten by pests, is compact to store, and retains purchasing power for future purchases. - What made paper money practical?
Light weight, easy counting, higher denominations, and centralised issuance (RBI) ensured trust and convenience. - List two ways coins aided trade across regions.
Standard weights/purity built trust; recognisable royal symbols eased acceptance by distant merchants. - How does UPI help small vendors?
Instant payments to bank accounts via QR, no need for change, easy records, and wide customer acceptance. - Give two reasons barter still appears today.
Community traditions (e.g., fairs) and practical reuse/exchange (books, clothes↔utensils) without cash outlay. - What does the Arthaśhāstra fine (100 paṇas) indicate?
It signals strong social expectations: aiding neighbours was a duty; penalties were set high to uphold community welfare.
Chapter 11Exercises ReadyComic Sans MS
Use these for classwork, homework, or quick revision. All answers align with the chapter text.