Money and Credit

Lesson

Part 1 — why we need money, its modern forms, how banks lend, and when credit helps or hurts.

In this lesson you will

Explain the double coincidence of wants and how money works as a medium of exchange
Describe modern forms of money: currency, demand deposits and digital payments
Explain how banks use deposits to give loans
Explain, with examples, how credit can help or trap a borrower

Part 1 at a glance

Diagram

Life without money: barter

No two of them can trade directly: no double coincidence of wants.

In barter, goods are exchanged directly for goods.

Check your understanding

Quick check: the weaver's problem

A weaver wants rice, but the rice farmer wants a plough, not a shawl. What problem does the weaver face?

Question: Multiple choice

Multiple choice1 mark

A weaver in an imagined village wants rice but has only shawls to offer. The rice farmer does not need a shawl; he wants a plough. What problem does the weaver face?

Cookies