1.
Important Notes
Chapter 1: Barter System
Introduction
Early humans were self-reliant and lived in villages.
With growing needs, specialization and interdependence developed.
Money replaced direct exchanges to make trade easier.
Meaning
Barter System = Direct exchange of goods for goods.
Example: Rice exchanged for clothes.
Existed before money and was time-consuming.
Merits of Barter System
1. Easy to Use – No banking needed.
2. Stable Employment – Everyone had a role to play.
3. Easy International Trade – No rules or currency needed.
Demerits of Barter System
1. Double Coincidence of Wants – Both parties must want what the other offers.
2. No Standard Value – Hard to decide fair exchange rates.
3. Problem of Dividing Goods – Indivisible items like elephants can’t be split.
4. Storing Wealth – Goods can perish or lose value.
Chapter 2: Evolution of Money
Introduction
Money is the basis of all modern economic systems.
It evolved through different stages for easier exchange.
Meaning
Derived from Latin Moneta.
Definition by G.F. Crowther: “Anything generally acceptable as a means of exchange.”
Money = Law-accepted form of settlement.
Features of Money
1. Easy Trading
2. Value Measurement
3. Saving and Wealth
4. Convenient & Divisible
5. Interchangeable
Stages in Evolution of Money
1. Barter System
Direct exchange using goods like cattle, salt, grain.
Faced issues like lack of standardization, portability, perishability.
2. Metallic Money
Use of gold, silver, copper due to durability and value.
Problems: Heavy, unsafe, slow transactions.
3. Paper Money
Emerged in 17th–18th century.
Easier, safer to carry than metals.
Example: Rupee notes in India.
4. Bank Money
Cheques, drafts, credit/debit cards.
Useful for large transactions (e.g. house or car).
5. E-Money
Online banking, mobile payments.
Digital form: convenient, paperless, instant.
2. Important Questions with Answers
Chapter 1: Barter System
Q1. What is meant by the Barter System?
Ans: Direct exchange of goods for goods without using money.
(Ref: Meaning section)
Q2. Mention any two merits of the Barter System.
Ans:
1. Easy to use – no complex financial systems.
2. Easy international trade – no currency needed.
(Ref: Merits section)
Q3. What is meant by Double Coincidence of Wants?
Ans: Both parties must want what the other has to offer for a successful trade.
(Ref: Demerits – Point 1)
Q4. List two problems in storing wealth in the Barter System.
Ans:
1. Goods can perish or lose value.
2. High cost of storing and maintaining goods.
(Ref: Demerits – Point 4)
Chapter 2: Evolution of Money
Q1. Define money according to G.F. Crowther.
Ans: “Money is anything that is generally acceptable as a means of exchange.”
(Ref: Meaning section)
Q2. What are the features of money? Mention any two.
Ans:
1. Easy trading
2. Can be saved and stored
(Ref: Features of Money)
Q3. Name the five stages of money’s evolution.
Ans:
1. Barter System
2. Metallic Money
3. Paper Money
4. Bank Money
5. E-Money
(Ref: Evolution of Money section)
Q4. State one advantage and one limitation of metallic money.
Ans:
Advantage – Durable and has intrinsic value.
Limitation – Bulky and inconvenient to carry.
(Ref: Metallic Money section)
Q5. What is E-Money? Give an example.
Ans:
E-Money is a digital form of money used online, e.g., digital currency.
(Ref: E-Money section)
3. Sample Question Paper
Financial Literacy – Class 6
Chapters: 1. Barter System & 2. Evolution of Money
Maximum Marks: 30
Time: 1 Hour
Section A – Multiple Choice Questions
(1 × 10 = 10 marks)
1. In the early days, people lived mostly near:
a) Deserts
b) Forests
c) Rivers
d) Mountains
2. Which of the following best describes specialization?
a) Growing multiple crops for survival
b) Producing everything one needs
c) Focusing on what one does best
d) Trading only with family
3. Which of the following was not a limitation of the barter system?
a) Lack of digital technology
b) No standard value
c) Indivisibility of goods
d) Storage problems
4. The exchange of an elephant for five sheep is difficult due to:
a) Double coincidence
b) Value fluctuation
c) Indivisibility
d) Perishability
5. Which is an example of commodity money used in the past?
a) Silver coins
b) Paper receipts
c) Stones and spears
d) Credit cards
6. What made metal coins unsafe according to the lesson?
a) Too small to be used
b) Could melt in heat
c) Could be stolen or lost
d) Easily damaged
7. Rupee, Dollar, and Pound are all examples of:
a) Bank money
b) Metallic money
c) Country-specific money
d) E-money
8. The primary reason for shifting from metallic to paper money was:
a) People disliked metals
b) Paper was cheaper
c) Scarcity of metals and safety
d) Lack of laws
9. Credit and debit cards are also called:
a) E-tokens
b) Plastic money
c) Digital bills
d) Virtual coins
10. Which form of money is completely digital and requires no physical presence?
a) Bank drafts
b) E-money
c) Coins
d) Cheques
Section B – Fill in the Blanks
(1 × 5 = 5 marks)
11. Early humans survived by __________ and __________.
12. Barter system involves __________ exchange of goods.
13. __________ is an economist who defined money most clearly.
14. Paper money first appeared in the __________ and __________ centuries.
15. __________ allows users to pay bills and transfer money online.
Section C – True or False
(1 × 5 = 5 marks)
16. Everyone in modern society produces everything they need. (______)
17. In barter trade, goods could always be easily divided. (______)
18. Salt was once used as a medium of exchange. (______)
19. Bank money is only used by government officers. (______)
20. E-money requires an internet connection. (______)
Section D – Match the Columns
(1 × 5 = 5 marks)
Column A Column B
21. Indivisible goods a) Digital currency
22. Paper money b) Elephant and sheep
23. Barter System c) No use of money
24. E-Money d) Introduced in 17th century
25. Metallic money e) Silver and copper coins
Section E – Very Short Answer Questions
(1 × 5 = 5 marks)
(Answer in one sentence only)
26. What does "double coincidence of wants" mean?
27. Name any one challenge faced when storing wealth in the barter system.
28. What made metallic money valuable in early societies?
29. Give one example of bank money.
30. How is E-money more convenient than paper money?
