0 A Vocabulary

Choose the correct word or phrase.

One reason why people buy gold is because it holds its value / is taken (or granted.

If Reading 1

Money

When we buy things, we for goods. Diamonds are valuable because they are so intrinsic / rare.

money

The cash we use every day is something we take for granted, hut for thousands of years people trailed without it. Ik-fore money was invented,

The dollar is the When people

of the USA. goods, they

people used a system called burti rina Bartering is simply swapping one good for another. Imagine that you have milk, for example, and you want

simply exchange one good for another.

Banks will only lend to people who can

to pay back the loan. Some shops won't accept credit cards. They will only take When something

people don't think it has great value. Coins and notes are used to value.

Metals have value because they can be used to make things.

If money can easily bo moved around and used we say it has Centuries ago people paid using

. such as gold and silver.

.like banknotes and coins, has no intrinsic value. It only represents value.

eggs. You simply l'ind someone who has eggs ;uul wants milk - ami you swap! However, you can sei that this isn't a very convenient way to trade.

f irst of all. you can't be sure that anyone will want what you've got to offer. You have to hope that you'll be lucky and find someone who has what you want and that he or she wants what you've got The second problem with bartering is that many goods don't hold their value For example, you can't keep your milk for a few months and then barter it. Nobody will want it!

After some time, people realised that some goods held their value and were easy to carry around and to trade with. Kxamples were metals like copper, bron/e and gold and otlu r useful goods like salt. These are examples of

сommiMlity money.

и о 67

With c o m m o d i t y m o n e y , the thing used Юг buying goods h;ts inherent value. For e x a m p l e , gold has inherent value because it is rare, beautiful and useful. Salt has inherent value I v c a u s e it makes food tasty. It you could buy things with a bag of salt, it meant you could keep a store of salt ami buy things a n y t i m e you needed them, in other words, c o m m o d i t y m o n e y can store value

I'sing commodity money was much m o r e convenient than ordinary bartering, but it still had drawbacks < >ne of these drawbacks is that commodity money often lacks litfuulity Liquidity refers to how easily m o n e y ean circulate T h e r e is obviously a limit to how much salt you can carry around' There's another problem with c o m m o d i t y money not e v e r y o n e may agree on the value of

^ В Comprehension

Complete the table with information f r o m the text.

1 lie commodity w hich is used as m o n e y . If you live by tlu- sea. salt may not b@ so valuable to you. Money needs to be а ц<мк11mil о/шччшш. In other words, e v e r y o n e should know and agree on the value of a unit. This way. money can be used to measure the value of o t h e r tilings.

T h e solution is to create a kind of money that does not have any real intrinsic value, but that represents value. T h i s is calledJuit money. T h e coins and notes that wi use today are an example of fiat m o n e y . Notes don't have any inherent value

they an- just paper. However, e v e r y o n e agrees

that they are worth something. More importantly,

their value is guaranteed by the government This is the reason why pounds and dollars and the world's o t h e r currencies have value.

Examples

Advantages

Disadvantages

Bartering

swapping eggs for milk

simple to understand

goods don't

Commodity Money

(3 ) and (4 )

allows you to store

not agrees on its value lack of liquidity means money can't

Fiat Money

(8 ) and (9 )

value is (10) by the government

Before you listen

Discuss the following with your partner.

You're going to listen to someone talking about the history of money. Before you listen, read through the statements below. Do you think they are true or false?

1 The earliest kind of money was

used about 3.000 years ago. td/fd

2 Shells were used as a kind of

fiat money. Td/fd

3 The first metal coins appeared

in Greece. td/fd

4 The first coins were round. td/fd

5 Paper money first appeared

in China. td/fd

6 The idea of paper money travelled

quickly to Europe. td/fd

68 M » r m M Gui4| T f- F f и A» t 13

В С Listening Ц)))

N o w listen and check your answers.

Before you read

Discuss the following with your partner.

-* What do banks do? Work with a partner to make

a list of all the services that banks provide. Then compare your list with others in the class.