Developments in Medium of Trade

16 Grade 7 Social Studies questions on Developments in Medium of Trade, with worked marking schemes. 16 questions are available on this topic in full.

1. Question 1

   1 mark

   Some early communities used cattle as a medium of exchange. A major disadvantage of using cattle as money was that they were:

   A. Too light to carry

   B. Impossible to count

   C. Never valued by people

   D. Not easily divisible into smaller units

   (1 mark)

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2. Question 2

   1 mark

   Before money was invented, the Akamba traders exchanged ivory directly for grains and cloth without using any currency. This form of trade is known as:

   A. Credit trade

   B. Barter trade

   C. Cash trade

   D. Online trade

   (1 mark)

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3. Question 3

   5 marks

   (a) Give one example of commodity money used by early Kenyan communities.

   (b) Explain two reasons why coins and paper money replaced commodity money as a medium of trade.

   (5 marks)

   Marking scheme

   (a) Any one (1 mark): cowrie shells / cattle / salt / iron hoes / beads / cloth. (b) Any two well-explained (2 marks each): coins and notes are easily divisible into smaller units allowing exact payment, whereas commodity money was not; they are portable/easy to carry compared to bulky goods like cattle; they are durable and do not perish unlike food commodities; they are standardised in value/widely accepted as legal tender, solving the problem of measuring value.

4. Question 4

   4 marks

   Mobile money services such as M-Pesa have changed how Kenyans trade. State four benefits of using electronic money in trade today.

   (4 marks)

   Marking scheme

   Any four (1 mark each): it is fast/instant; it is convenient (can be used anywhere/anytime); it is safe/reduces risk of carrying cash; it allows trade over long distances; it keeps records of transactions; it reduces the need to carry coins/notes; it allows saving and borrowing.

5. Question 5

   1 mark

   Communities along the East African coast once used cowrie shells as a medium of exchange. The main advantage of cowrie shells over barter was that they were:

   A. Manufactured in factories

   B. Impossible to lose

   C. Generally accepted and easy to carry

   D. Edible when food was scarce

   (1 mark)

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6. Question 6

   3 marks

   Barter trade was used by many communities long ago. State three challenges that people faced when using barter trade.

   (3 marks)

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7. Question 7

   1 mark

   A bank issues notes and coins that everyone in the country must accept as payment by law. Such officially recognised money is called:

   A. Commodity money

   B. Foreign aid

   C. Legal tender

   D. Barter goods

   (1 mark)

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8. Question 8

   1 mark

   For an item to serve well as a medium of exchange, it should mainly be:

   A. Heavy and bulky

   B. Durable and widely acceptable

   C. Edible and perishable

   D. Rare and impossible to divide

   (1 mark)

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9. Question 9

   1 mark

   Which sequence correctly shows the development of the medium of trade from earliest to most recent?

   A. Barter, commodity money, coins, paper money, electronic money

   B. Electronic money, coins, barter, paper money

   C. Paper money, coins, barter, electronic money

   D. Coins, barter, paper money, electronic money

   (1 mark)

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10. Question 10

    1 mark

    Which of the following is the official currency used in Kenya today?

    A. Kenya Shilling

    B. Kenya Dollar

    C. Kenya Franc

    D. Kenya Pound

    (1 mark)

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11. Question 11

    5 marks

    Before money was invented, people exchanged goods directly with one another. a) Name the system of trade in which goods are exchanged directly for other goods without using money. (1 mark) b) Explain two problems that people faced when using this system of exchange. (4 marks)

    (5 marks)

    Marking scheme

    a) The system is called barter trade (the barter system). b) Two problems faced when using barter trade (any two, well explained): - Lack of a double coincidence of wants: for an exchange to happen, each person had to want exactly what the other was offering at the same time, which was difficult to find. - Lack of a common measure of value: it was hard to decide how much of one good equalled another (for example, how many goats equal one cow), leading to disagreements. - Difficulty in storing wealth: some goods such as food were perishable and could go bad, so wealth could not be kept for long. - Indivisibility of some goods: items such as a live animal could not be divided into smaller parts to buy small-value goods. - Difficulty in transporting goods: bulky goods were hard to carry over long distances to exchange.

12. Question 12

    1 mark

    A shopkeeper in Nairobi receives payment when a customer sends money instantly from a mobile phone. This modern medium of trade is best described as:

    A. Electronic (mobile) money

    B. Barter exchange

    C. Commodity money

    D. Cowrie shells

    (1 mark)

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13. Question 13

    1 mark

    A trader wants to exchange a goat for salt, but the salt seller does not need a goat. This problem of matching wants is called the absence of:

    A. Division of labour

    B. Double coincidence of wants

    C. Profit margin

    D. Legal tender

    (1 mark)

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14. Question 14

    1 mark

    Before money was invented, people exchanged goods directly for other goods. This system of trade is called:

    A. Banking

    B. Credit trade

    C. Barter trade

    D. Hire purchase

    (1 mark)

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15. Question 15

    5 marks

    Before the use of money, people in Africa used barter trade.

    (a) What is meant by barter trade? (2 marks)

    (b) State three problems that were associated with barter trade. (3 marks)

    (5 marks)

    Marking scheme

    (a) Barter trade is a form of trade in which goods are exchanged directly for other goods (or services) without the use of money. (b) Three problems associated with barter trade: - Lack of a double coincidence of wants - it was difficult to find a person who needed what you had and also had what you needed. - Difficulty in dividing some goods - some items (such as a cow) could not be divided into smaller units to match the value of what was being exchanged. - Lack of a common measure of value - it was hard to decide how much of one good was equal to another, making fair exchange difficult. (Other acceptable: some goods like food were perishable and could not be stored; difficulty in transporting bulky goods.)

16. Question 16

    1 mark

    Before money was invented, communities in Africa exchanged goods directly for other goods. This system was known as:

    A. Banking

    B. Barter trade

    C. Taxation

    D. Borrowing

    (1 mark)

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