Directions: For this part you are required to summarize the main idea of the following passage in no more than 80 words. Write your summary on the ANSWER SHEET. (10 points)
Buying things today is so simple. Just enter a shop, say a book store, choose the desired book and pay for it. Long ago, before the invention of money, how did people trade? The most primitive way of exchange should be the barter trade. In this form of transaction, people used goods to exchange for the things that they had in mind. For instance, if person A wanted a book and he had a spare goat, he had to look for someone who had the exact opposite, that is, that someone, say person B, had a spare book of person A’s choice and was also in need of a goat. Having found such a person, the problem did not end there. A big goat might be worth not only one book, hence person B might have to offer person A something else, say five chickens. However, he would run the risk of person A rejecting the offer as he might not need the chickens. The above example clearly illustrates the inefficiency of barter trading.
Many years later, the barter trade finally gave way to the monetary form of exchange when the idea of money was invented. In the early days, almost anything could qualify as money: beads, shells and even fishing hooks. Then in a region near Turkey, gold coins were used as money. In the beginning, each coin had a different denomination. It was only later, in about 700 BC, that Gyges, the king of Lydia, standardized the value of each coin and even printed his name on the coins. Monetary means of transaction at first beat the traditional barter trade. However, as time went by, the thought of carrying a heavy pouch of coins for shopping appeared not only troublesome but thieves attracting. Hence, the Greek and Roman traders who bought goods from people in faraway cities invented checks to solve the problem. Not only were paper checks easy to carry around, they discouraged robbery as these checks could only be used by the person whose name was printed on the notes. Following this idea, banks later issued notes in exchange for gold deposited with them. These bank notes could then be used as cash. Finally, governments of today adopted the idea and began to print paper money, backed by gold for the country’s use. Today, besides enjoying the convenience of using paper notes as the mode of exchange, technology has led man to invent other means of transaction too like the credit and cash cards.
