Reading (перевод каждого текста 1 балл)

I

Money

When the English colonists first settled in the new World they brought little of the money they had used at home, which they called pounds, shillings and pence. It didn’t really matter, because the Indians they traded with were not interested in British money. The native Americans were willing to exchange food for small pieces of paper and metal. They would, however, trade fish, furs and other essentials through barter. Barter is the exchange of one good or service for another.

The earliest form of trade was by barter. But barter has many drawbacks. Many problems associated with barter led the Massachusetts colonists to turn to wampum. Wampum, a form of money among native Americans in Massachusetts in the 1640’s, consisted of certain black and white shells. (Black shells were worth twice as much as the white ones.) Both colonists and Indians would cheerfully accept wampum in payment for anything they had to sell in those days. Wampum became the medium of exchange in this early colonial period. Those who had to have English money could purchase it at the rate of six white shells to the penny. Wampum served as money to those early settlers, and money represented a vast improvement over barter.

What is money? Money can be anything that is generally accepted in payment for goods and services. From the earliest times precious metals, such as gold and silver, along with copper, have been the most popular forms of money. But they were not the only forms. In some societies favored things such as tobacco, fish hooks, shells and various forms of paper were used as money.

1 How did the first British settlers exchange goods with native Americans?

2 What is barter?

3 What is wampum?

4 What is money?

II

Qualities of money

Stability. The value of money should be more or less the same today as tomorrow. In societies where the value of money fluctuates (goes up and down) people will hoard it in the hope that its value will increase, or spend it immediately thinking it will be worth less tomorrow. Either action could be harmful to the economy.

Portability. Modern money has to be small enough and light enough for people to carry. Bowling balls would not be a practical form of money.

Durability. The material chosen has to have a reasonable life expectancy. For that reason most currencies use a very high quality paper for their money.

Uniformity. Equal denominations of money should have the same value. It’s easy to see that if some quarters or dollar bills were worth more than others, things could be pretty confusing.

Divisibility. One of the principal advantages of money over barter is its ability to be divided into parts. In other words, while making change for a dollar is easy, making change for a chicken is more difficult.

Reconcilability. Money should be easily recognized for what it is and hard to copy. The quality of the paper and the earnings make paper money extremely difficult to counterfeit.

We can also define money by what it does, which is to provide: a medium of exchange, a medium of value, a store of value.

A medium of exchange. The principal difference between a barter economy and a money economy is that in the barter economy you must find someone who has what you want and wants what you have. In a money economy people can sell what they have to anyone and use the money to buy what they want. Money, therefore, is the medium that enables exchanges to be made easily.

A measure of value. Money enables us to state the price of something in terms that everyone can understand.

Store of value. Money enables us to use the value of something that we sell today to make a purchase sometime in the future.

Comment each quality and function of money.