Sunday, July 29, 2012

Trade and Money

Trade is the exchange of goods and services, buying and selling. Coins were invented when overseas trading began and merchants used weights of precious metals, such as silver, to buy and sell. The world today survives on trade. Few countries are self-sufficient so they sell what they have to raise money to buy what they need. Products are visible items such as food or automobiles, or 'invisible' items such as the labor or manufacturing expertise that makes a product, or a financial service, such as insurance. In international trade today little actual money changes hands, as transactions take place on a paper or over the telephone and are managed using computer systems.
Money is a recognized form of payment. Today units of money are represented by notes and coins, but they have taken many other forms. Other forms of money include copper rings, salt, beads, stone dishes, cocoa beans and axes. When the first coins were issued, it was the weight that determined the value. At first paper money was simply a handwritten receipt, but later receipts of fixed values were issued by governments. Markets are still at the heart of communities all over the world. Every day people travel to the village markets to buy and sell, to meet friends and exchange news.
Early people could make, find, or grow most of the things they needed for every day life, but as civilization developed and communities grew, people began to need more things. Craftsmen, such a potters or weapon-makers, developed business. In the middle ages people did not use money. But bartered or exchanged items they judged to be of equal value or worth a quantity or wood, or food, an ax, or a day's labor. Today we calculate the value of something in terms of units of money, but the value of something may not be fixed, and haggling over prices is still very much part of buying things in markets the world over. Trade centers have traditionally grown up in places where transportation is good and there is no shortage of materials, goods or labor.
The goods and services that a country sells abroad are its exports, and the goods and services that it buys in are its imports. Imports and exports are compared to calculate a balance of payment between two countries. If one country exports more to another country than it Imports from it, it is said to have a trade surplus. If it imports more than it exports, that is called a trade deficit.
The world as we know it today has been shaped by trade. The first so-called explorers were in fact traders sent on missions to find new trade routes, markets, and products.

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