Subsistence Economy Money Economy HISTORY OF TRADING INSTRUMENTS

Trading in Subsistence Economies Trading in early economies was conducted by means of barter.

Items used to facilitate exchange Shells Dog’s teeth Beads Grain Fishhooks Arrowheads

Development of Money was invented by the Greeks about 650 BC. http: //library. thinkquest. org/05 aug/01401/

Characteristics of Money It must be durable It must be divisible It must be portable (convenient to carry) It should be homogenous (It’s features should be identical) It must be generally acceptable

Functions of Money It is a medium of exchange It is a store of value (money can be stored for future spending) It is a means of deferred payment (makes possible credit transactions) It is a unit of account (it is measured in units that allow debts to be calculated. )

Types of Money Coins Banknotes or Paper money

Other Methods of Payment Credit Card This is a form of credit. When a customer pays a bill by using a credit card he/she is purchasing goods or services on credit. What are the benefits and drawbacks of using a credit card?

Debit Card A bankcard used to make an electronic withdrawal from funds on deposit in a bank, as in purchasing goods or obtaining cash advances.

Bills of Exchange An unconditional order issued by a person or business which directs the recipient to pay a fixed sum of money to a third party at a future date. The future date may be either fixed or negotiable. A bill of exchange must be in writing and signed and dated.

Electronic Transfer Electronic money (also known as electronic cash, electronic currency, digital money or digital cash) refers to money which is exchanged only electronically. Typically, this involves use of computer networks, the internet and digital stored value systems. Electronic Funds Transfer (EFT) and direct deposit are examples of electronic money.

Tele-banking and E-Commerce Tele-banking: system of banking by telephone: a system of transacting business with a bank by telephone

E-Commerce Ecommerce simply means electronic business Break ecommerce down into e and business, and the definition is clear. E simply means anything done electronically, usually via the Internet. Business means business. . . that you already understand. The ecommerce process explained Ecommerce is the means of selling goods on the Internet, using web pages. This involves much the same processes as selling goods elsewhere, but in a digital format.

HOMEWORK l l Discuss three benefits of electronic money transfer to today’s consumers. (6 marks) What is a cheque? Describe the following types of cheques: open, crossed, manager’s and certified. Draw and label a diagram of a cheque. DUE: MONDAY, SEPT. 17, 2010