D2.Eco.5.6-8: How Money Makes Trading Easier by Cutting Transaction Costs
In plain English: D2.Eco.5.6-8 is the C3 Framework economics indicator for grades 6-8 that asks students to explain ways in which money facilitates exchange by reducing transactional costs. Students compare barter with money and show how a money that everyone accepts, that is easy to split, carry and check, and that sets one list of prices saves the time, effort and risk of trading.
Explain ways in which money facilitates exchange by reducing transactional costs.
C3 Framework for Social Studies (NCSS) · Dimension 2: Applying Disciplinary Concepts and Tools · Discipline: Economics · Exchange and Markets · Official standard
D2.Eco.5.6-8 asks students to explain how money makes exchange easier by lowering transaction costs: the time, effort, risk and expense of making a trade, apart from the price of the thing itself. Without money, people barter (trade goods directly for other goods), and every trade needs a partner who has what you want and wants what you have. Students learn five kinds of transaction costs (searching, agreeing on value, splitting, carrying and storing, and checking) and how a good money cuts each one.
Students read short passages from an 1888 history of American money (Source 1) about colonial money such as tobacco, wampum and musket balls, and the confusion of four different shilling values before the dollar. They then analyze an invented camp trading day run first by barter and then with tokens (Source 2). Diagram 1 shows why barter needs many more exchange rates than money. The activities let students feel the difference in a trading game, rate possible kinds of money, and diagnose transaction costs in short situations.
Learning Objectives
By the end of this lesson, students will be able to:
Define barter, transaction costs and the three jobs of money (medium of exchange, unit of account, store of value)
Explain how money lowers the costs of searching for a trading partner and of agreeing on value
Explain how a money that is easy to split, carry, store and check lowers the cost of trading
Use evidence from a primary source and an invented scenario to explain how a change in money changed the cost of exchange
Identify transaction costs that money reduces but does not remove
Prior Knowledge Required
Students should already be comfortable with:
Determining the meaning of words in a history text from context and a glossary RH.6-8.4
Multiplying and dividing whole numbers and decimals, including with money 6.NS.B.3
Knowing that buyers and sellers trade goods and services in markets D2.Eco.3.6-8
"Imagine that money disappeared tonight. Tomorrow you want lunch, and all you own is a skateboard. What would you have to do to get a sandwich? List every problem you can think of."
Give students two minutes to list problems, then collect them on the board. Typical answers: finding a sandwich maker who wants a skateboard; a skateboard is worth far more than one sandwich; carrying the skateboard around; not knowing what is fair. Tell students that each problem is a transaction cost, a cost of making a trade apart from the price itself, and that D2.Eco.5.6-8 asks them to explain how money lowers these costs.
Direct Instruction15-20 minutes
Key terms for D2.Eco.5.6-8 (working definitions)
Term
Meaning
Example
Barter
Trading goods or services directly for other goods or services, with no money
Swapping a video game for a pair of sneakers
Transaction costs
The time, effort, risk and expense of making a trade, apart from the price of the thing traded
An hour spent looking for someone who will trade
Double coincidence of wants
When each of two people has what the other wants, so a barter trade can happen
You have apples and want pears; your neighbor has pears and wants apples
Medium of exchange
Something people accept in payment because they can spend it again
A store takes dollars because it can use them to pay its workers
Unit of account
A common measuring unit for prices, so values can be compared
A menu that lists every price in dollars and cents
Store of value
Something that keeps its value over time, so it can be saved and spent later
Birthday money kept for a month and then spent
Commodity money
A good that is useful in itself and is also used as money
Salt, cattle or tobacco used to pay for things
Part 1: Key terms. Go through the table. Stress that a transaction cost is not the price: if a bike costs $100 and you spend two hours and $5 in bus fare to find a seller, the two hours and the $5 are transaction costs.
Part 2: Five transaction costs of barter. List them on the board and keep them up for the whole lesson:
Searching: finding a partner with a double coincidence of wants.
Agreeing on value: settling how many of one good equal another, for every pair of goods.
Splitting: many goods cannot be divided into smaller amounts without losing their value.
Carrying and storing: some goods are heavy, bulky or spoil.
Checking: making sure the goods you receive are real and of good quality.
Part 3: How money cuts each cost. Show Diagram 1. Because everyone accepts money, you sell to anyone who wants your good and buy from anyone who has what you want, so one trade becomes two easy ones. Because every price is in one unit, you compare values at a glance. Good money is easy to split into small amounts, light to carry, lasts a long time and is hard to fake. Work these examples.
Agreeing on value: counting exchange rates (invented)
An exchange rate in barter says how much of one good trades for another, such as "3 loaves of bread for 1 candle." A tiny village trades only 4 goods. How many exchange rates must people know if they barter? How many prices if they use money? What happens with 20 goods?
Result: Barter needs one rate for every pair of goods: 4 x 3 / 2 = 6 rates. Money needs one price for each good: 4 prices. With 20 goods: 20 x 19 / 2 = 190 rates in barter, but only 20 prices with money. The more goods a community trades, the bigger the savings.
Searching: the double coincidence of wants (invented)
A baker wants shoes. The shoemaker does not want bread; she wants fish. The fisher wants bread. In barter, how can the baker get shoes, and how does money change this?
Result: Barter: the baker must find the fisher, trade bread for fish, then trade the fish to the shoemaker: two trades and a lot of walking. With money: the baker sells bread to anyone who wants it, then pays the shoemaker. The shoemaker accepts money because she can spend it on fish. No one needs a double coincidence of wants.
Splitting: when goods cannot be divided (invented)
A woodworker owns one rocking chair worth $60 and wants a lamp worth $15. In barter, the lamp seller would have to want a chair and give back other goods worth the difference. With money, what happens?
Result: With money she sells the chair for $60, pays $15 for the lamp and keeps $60 - $15 = $45 to spend on other things. A chair cut into four pieces is worth nothing, but $60 splits into any amounts.
Checking: inspecting tobacco versus counting bills (invented)
A shopkeeper is paid in bundles of tobacco leaves. Inspecting the quality of each bundle takes about 3 minutes, and she has 40 customers a day. Paper bills take about 20 seconds per payment to count. About how much time does she save each day?
Result: Tobacco: 40 x 3 = 120 minutes. Bills: 40 x 20 = 800 seconds, about 13 minutes. She saves about 120 - 13 = 107 minutes a day, close to two hours she can spend serving more customers.
Unit of account: adding prices in a decimal system (invented)
Before the dollar, many colonists kept accounts in British-style money: 12 pence in a shilling and 20 shillings in a pound. Add 3 shillings 8 pence and 2 shillings 7 pence. Then add $0.61 and $0.43. Which is easier?
Result: 3s 8d + 2s 7d = 5s 15d; since 15 pence = 1 shilling 3 pence, the total is 6 shillings 3 pence. $0.61 + $0.43 = $1.04, ordinary decimal addition. Counting in tens, as dollars and cents do, makes every bill and every comparison quicker.
Teacher tip. Students often think money removes all costs of trading. Push back: you still have to find a store, travel there and sometimes pay a fee to use a card. Money lowers transaction costs; it does not erase them. Also note that the three jobs of money match the costs: as a medium of exchange it cuts searching, as a unit of account it cuts agreeing on value, and as a store of value it cuts storing.
Guided Practice15 minutes
Money in early America. Context note: Source 1 comes from a history of American money published in 1888 by George G. Evans, a Philadelphia publisher, together with a guide to the United States Mint, where coins are made. It describes things people used as money before and after the colonies became the United States. A secondary source written about 250 years after some of these events, it shows what people in 1888 believed about the past. Read paragraphs 1 and 2 aloud. Glossary: "circulating medium of exchange" (money that passes from hand to hand), "primeval" (very early), "commercial intercourse" (trade), "commodities" (goods), "wampum" (beads made from shells by Native peoples of the Atlantic coast, also used by colonists as money), "durable" (lasting a long time), "denomination" (the value printed or stamped on money, such as one cent), "legal tender" (money the law says must be accepted to pay debts and taxes).
1The need of a circulating medium of exchange has been acknowledged since the earliest ages of man. In the primeval days, bartering was the foundation of commercial intercourse between the various races; but this gave way in time, as exchanges increased. In the different ages many commodities have been made to serve as money,—tin was used in ancient Syracuse and Britain; iron, in Sparta; cattle, in Rome and Germany; [...] tobacco, in the earliest settlements of Virginia; codfish, in New Foundland; bullets and wampum, in Massachusetts; [...] sugar, in the West Indies; and soap, in Mexico. [...]
2[...] the natural tendency and disposition of men to accumulate riches led them to fix a special value upon the metals, as a durable and always available kind of property. [...] The government, to facilitate public business, stamped the various pieces of metal with their weight and quality, as they were received at the Treasury; [...] The next step was to reduce current prices of metal to a uniform size, shape, and quality, value and denomination, and make them, by special enactment, a legal tender for the payment of all taxes or public dues.
[...]
3Previous to the passage of the law by the Federal government for regulating the coins of the United States, much perplexity arose from the use of no less than four different currencies or rates, at which one species of coin was recoined, in the different parts of the Union. Thus, in New Hampshire, Massachusetts, Maine, Rhode Island, Connecticut, Vermont, Virginia and Kentucky, the dollar was recoined at six shillings; in New York and North Carolina at eight shillings; in New Jersey, Pennsylvania and Maryland at seven shillings and six pence; in Georgia and South Carolina at four shillings and eight pence. [...] the denominations of money of account were required to be dollars (the dollar being the unit), dismes or tenths, cents or hundredths, and mills or thousandths of a dollar. Nothing can be more simple or convenient than this decimal subdivision.
[...]
4“Peltry,” we learn, was one of the principal articles of currency, and was known as “pelt,” or Massachusetts currency, and was extensively used in trading between Indians and whites, sometimes called “Beaver Money,” “Corne, Wheate, Barley, and Rye;” and a still more quaint currency was established, as will be found in an old Massachusetts court order, as follows: “It is likewise ordered that muskett balletts of a full boare shall passe current for a farthing a peece, provided that noe man be compelled to take above 12d. att a tyme of them.”
G. G. Evans, editor, Illustrated History of the United States Mint, "Money of the Past and Present" and two later passages on colonial money (Source 1) (1888). Public domain (published 1888). Source text.
Many kinds of money. Prompt: choose three items from the list in paragraph 1. For each, name one transaction cost it would create if used as money. Teacher note: cattle cannot be split into small payments; codfish spoils, so it is hard to store; tobacco varies in quality, so every payment must be checked; iron is heavy to carry. Accept any reasoned answer tied to the five costs on the board.
Why metals? Prompt: paragraph 2 says people valued metals "as a durable and always available kind of property." Which job of money does "durable" point to? Teacher note: store of value. Metal does not rot, so it can be saved now and spent later.
Legal tender. Prompt: paragraph 2 says coins were made "a legal tender for the payment of all taxes or public dues." Why would that make sellers more willing to accept coins? Teacher note: if the law says coins must be accepted for debts and taxes, every seller knows they can be spent again, so coins become a medium of exchange that almost everyone takes.
A claim to question. Prompt: paragraph 1 says that in the earliest days bartering was the basis of trade. How could a historian check this claim? Teacher note: the author gives no evidence. Many historians and anthropologists today argue that early communities often used gifts and credit among neighbors, with barter mostly between strangers. Students do not need to settle the debate; they should notice that a claim in a source needs evidence.
Independent Practice10-15 minutes
One coin, four values. Students read paragraphs 3 and 4 of Source 1 on their own. Glossary: "perplexity" (confusion), "recoined" (here: counted as, or valued at), "shillings" and "pence" (British-style money units: 12 pence made 1 shilling), "money of account" (the unit used to keep accounts and write prices), "dismes" (an early spelling of dimes), "peltry" (animal furs), "farthing" (a coin worth one-fourth of a penny), "12d." (12 pence; d. was the abbreviation for pence), "compelled" (forced). The table restates the dollar values from paragraph 3.
Value of one Spanish dollar in local shillings before the federal coinage law (from Source 1, paragraph 3)
Region named in Source 1
One dollar was counted as
New Hampshire, Massachusetts, Maine, Rhode Island, Connecticut, Vermont, Virginia and Kentucky
6 shillings
New York and North Carolina
8 shillings
New Jersey, Pennsylvania and Maryland
7 shillings and 6 pence
Georgia and South Carolina
4 shillings and 8 pence
Students answer on their own: (1) A merchant sells a saddle for 4 dollars. What would its price be in shillings in Massachusetts, in New York and in Georgia? (2) A traveler from New York is shopping in Massachusetts. Why would she need to stop and calculate before paying? Teacher answers: (1) 4 x 6 = 24 shillings; 4 x 8 = 32 shillings; 4 x (4 shillings 8 pence) = 16 shillings 32 pence = 18 shillings 8 pence. (2) A "shilling" meant a different amount in each place, so a price in shillings had to be converted before it could be compared. Collect the answers; the quiz uses Source 1 again.
Closure10 minutes
Two Trading Days. Introduce Source 2, an invented scenario about a summer camp that tried trading first without money and then with tokens. Students read it once on their own; it is used in the quiz and the homework.
1Invented scenario, written for this page. Camp Juniper is a fictional summer camp with 48 campers. Each summer the camp holds two Trading Days in the dining hall. Each one lasts 90 minutes, and campers bring things they made or brought from home: friendship bracelets, comic books, granola bars, sticker sheets and painted rocks.
2Monday was Barter Day. No money was allowed, so every trade was one item for another. Maya had a comic book and wanted a friendship bracelet. Leo made bracelets, but he wanted granola bars, not comics. Maya spent 25 minutes walking around until she found Priya, who wanted a comic and had two granola bars. Maya traded her comic for the granola bars, then traded them to Leo for a bracelet. Other campers argued about what was fair. "Is one painted rock worth half a comic book?" Sam asked. Nobody could cut a comic book in half. By the end, the counselors had counted 30 trades.
3Thursday was Token Day. Every camper started with 10 camp tokens, wooden circles stamped with a pine tree. Campers could spend tokens or earn more by selling. The counselors posted one price board: bracelet 4 tokens, comic book 6 tokens, granola bar 2 tokens, sticker sheet 1 token and painted rock 3 tokens. Maya sold her comic to Priya for 6 tokens and bought a bracelet from Leo for 4. It took her 6 minutes. This time the counselors counted 84 sales.
4One problem came up on Token Day. Two campers drew pine trees on cardboard circles and tried to spend them. After that, the counselors checked tokens at a table by the door, which made a short line. Next summer they plan to use tokens with the camp's metal stamp pressed into the wood, which are hard to copy. On Friday, campers could also trade leftover tokens back to the camp store for snacks, so tokens did not lose their use when Trading Day ended.
SVHS (invented scenario written for this page), Trading Day at Camp Juniper (Source 2: invented scenario). Original passage written for this page.
Exit ticket: Name one transaction cost of barter and explain, in one or two sentences, how money lowers it. Use an example from either source.
Teacher note on the sources: Source 1 is quoted exactly as published in 1888. Its phrase "between the various races" and its description of trade "between Indians and whites" reflect the language of its time. The excerpt leaves out part of the book's list of things once used as money; that list also names enslaved people among the Anglo-Saxons. For many Native nations wampum also carried diplomatic, ceremonial and record-keeping meaning that went far beyond money; the source describes only its use in colonial trade. Source 2 is invented. The lesson takes no position on any current debate about money or payment systems.
Differentiation Strategies
For Struggling Students
Give a five-row organizer (searching, agreeing on value, splitting, carrying and storing, checking) with a column for "barter problem" and one for "how money helps"
Provide sentence frames: "In barter, ___ was hard because ___. Money helps because ___."
Read Source 1 aloud one paragraph at a time and restate each in one plain sentence before answering
For Advanced Students
Use Diagram 1 to find a rule for the number of barter exchange rates with n goods, then test it with 10 goods
Research one other commodity money (for example, salt or cowrie shells) and rate it on the five transaction costs
Write a short paragraph on whether a phone payment app is money, using the three jobs of money
Assessment Guidance
What to Look For
Strong answers name a specific transaction cost, explain what makes it costly under barter or a poor money, and show which feature of money (accepted by everyone, one unit for prices, easy to split, carry, store or check) lowers it, with a detail or number from a source. Watch for three confusions: treating the price of a good as a transaction cost; thinking money removes every cost of trading; and mixing up the medium of exchange (spending) with the unit of account (measuring prices).
02
Classroom Activities
3 Activities
1
Barter Round, Money Round
20 minWhole class
Students trade picture cards twice: first by barter, then with paper tokens and a posted price list. The class counts completed trades in each round and connects the difference to the five transaction costs.
Setup
Print 30 trade cards: 5 cards for each of 6 goods (apples, pencils, stickers, bracelets, comics, cookies). On the back of each card, write one different good the holder WANTS.
Print about 150 paper tokens (5 per student for a class of 30) and one price board: apples 2, pencils 1, stickers 1, bracelets 4, comics 5, cookies 2 tokens.
Give each student one card. A trade is complete when the student holds the good written on the back of the starting card.
Rounds
Barter round (5 minutes): students may only swap cards one for one. A student who finishes sits down.
Money round (5 minutes): reshuffle and hand out the cards again, plus 5 tokens each. Students may sell cards for tokens at the posted prices and buy with tokens. A small bank table sells extra goods for tokens.
After each round, count how many students reached their WANT card and record the two numbers on the board.
Discussion Questions
Which transaction costs did you feel in the barter round? Name the moment you felt each one.
What made the money round easier or harder? Did anyone still have trouble, and why?
Why did a bracelet cost more tokens than a pencil, and how did the price board save time?
Modification for a Small Class
With fewer than 18 students, use 4 goods instead of 6 and 3 tokens each, and run each round for 3 minutes.
2
The Good-Money Test
15 minPairs
Pairs rate six things people have used, or could use, as money on five features that lower transaction costs. Each feature earns 0 (poor), 1 (fair) or 2 (good), for a top score of 10.
Candidates and Features
Candidates: cattle, codfish, tobacco leaves, musket balls, paper dollar bills, a debit card.
Features: widely accepted (fewer searching costs), easy to split into small amounts, easy to carry, lasts a long time without spoiling, and hard to fake or easy to check.
Sample Answers for the Teacher
Cattle: accepted in farm areas (1), cannot be split (0), hard to carry, though they can walk (0), last for years but need feeding (1), easy to check by looking (2): about 4.
Paper dollar bills: accepted nearly everywhere in the United States (2), split into coins and smaller bills (2), light (2), last for years if kept dry (1), hard to fake because of security features (2): about 9.
Accept other scores that pairs can justify. The point is the reasoning, not one right total.
Discussion Questions
Which feature mattered most to your scores, and why?
A debit card needs a card reader and a bank account. Which costs does it lower, and which does it add?
Modification for English Learners
Add a picture to each candidate card and post the five features with one-line definitions in English and the student's home language.
3
Transaction Cost Detectives
15 minGroups of 3, then whole class
Each group sorts 8 situation cards by the transaction cost they show, then explains how money, or a better money, would lower it. Groups share one card each with the class.
The 8 Situation Cards (invented)
A farmer with a cow wants one pair of gloves.
A potter wants rice, but the rice grower already has all the pots she needs.
A trader is handed a sack of salt and must decide whether sand has been mixed in.
A fishing village pays in dried fish, and the payment must be used before it goes bad.
A traveler must learn a new list of what trades for what in every town on the road.
A merchant receives a coin that looks too light and has to weigh it.
A family has to haul 20 bags of grain to town to pay for a plow.
Two neighbors argue for an hour over how many eggs equal one blanket.
Sample Answers for the Teacher
Splitting: card 1. Searching: card 2. Checking: cards 3 and 6. Carrying and storing: cards 4 and 7. Agreeing on value: cards 5 and 8.
For each card, money helps because it is accepted by everyone, divides into small amounts, is light and lasting, has one price list, and comes in uniform coins or bills that are easy to check.
Discussion Questions
Which cards show a problem that a better money would fix, not just any money?
Can you think of a cost of trading that money cannot remove?
03
Diagrams & Visual Aids
1 diagrams
Diagram 1: Barter Needs Many Exchange Rates; Money Needs One Price per Good
With six goods, barter needs an exchange rate for every pair of goods: 15 lines on the left. With money, each good needs only one price: 6 lines on the right. Invented goods; the counts follow the rule that n goods have n x (n - 1) / 2 pairs.
04
Homework Assignment
~30 min
D2.Eco.5.6-8 Homework: How Money Lowers the Cost of Trading
Directions: Part 1 asks about trading in general. Part 2 uses Sources 1 and 2 in the lesson plan. Answer in complete sentences and show any arithmetic.
Part 1: Barter and Money (Problems 1-3)
Imagine your school banned money for one week, and students could only barter for snacks and supplies. Describe two transaction costs you would face. For each, explain how money normally lowers it.
A town market trades 8 kinds of goods. (a) How many exchange rates would people need if they bartered every pair of goods? (b) How many prices would they need with money? Show your work, and explain what the difference means for a shopper.
Invented example: a farmer in a barter village owns a calf worth about as much as 6 bushels of wheat, but today she needs only 2 bushels. (a) Which transaction cost does she face? (b) In a money village the calf sells for $180, and wheat costs $30 a bushel. How much money does she have left after buying 2 bushels? Explain how money solved her problem.
Part 2: Using the Sources (Problems 4-6)
Use Source 1, paragraph 3. A traveler from Georgia carries 3 Spanish dollars to Pennsylvania. (a) How many Georgia shillings and pence were 3 dollars worth? (b) How many Pennsylvania shillings and pence? Show your work. (c) Explain why this system made trade between states slower.
Use Source 2. On Token Day, Leo started with 10 tokens, sold 5 bracelets, and bought 3 granola bars and 1 painted rock. (a) How many tokens did he end with? Show your work. (b) What would Leo have had to do on Barter Day to get the same goods, and why would it have taken longer?
Write a paragraph of 5-7 sentences answering: "How did money make trading easier in early America and at Camp Juniper?" Use evidence from both sources, name at least two different transaction costs, and include one cost that money did not remove.
Rubric
Criterion
Full Credit (2 pts)
Partial Credit (1 pt)
No Credit (0 pts)
Transaction Costs
Names specific costs (searching, agreeing on value, splitting, carrying and storing, checking) and explains each
Names costs without explaining them
No transaction costs identified
How Money Helps
Links each cost to a feature of money that lowers it
General statement that money is easier
No link to money
Evidence and Math
Accurate details from both sources; Problems 2-5 correct with work
Loose evidence or an arithmetic slip
No evidence; work missing
Limits
Problem 6 names a cost money did not remove
Mentions a limit vaguely
No limit named
05
Quiz: 20 Questions
Interactive, with answers
Instructions
Questions 1-8 and 18 use Source 1 (the 1888 history of money) in Guided Practice and Independent Practice. Questions 9-17 use Source 2, the invented Camp Juniper scenario in Closure. Questions 19 and 20 use both sources. Your score updates as you answer, and Reset quiz clears everything.
Multiple choice: pick an option to check it. Short answer: write your answer, then reveal the model answer.
0 of 20 answered · 0 correct
Question 1 of 20 · Multiple Choice
According to Source 1, paragraph 1, which items were used as money in Massachusetts?
Answer: B
The list says "bullets and wampum, in Massachusetts." Choice A pairs items the list gives for Newfoundland and the West Indies. Choice C pairs Virginia's and Mexico's money. Choice D pairs items from Rome and Germany, and Sparta. Each wrong choice takes real items from the list but attaches them to the wrong place.
Question 2 of 20 · Multiple Choice
Paragraph 2 says the government "stamped the various pieces of metal with their weight and quality." How did the stamp lower transaction costs?
Answer: C
A stamp showing weight and quality saves every later user the time and risk of weighing and testing, which is a checking cost. Choice A invents an ownership record; the stamp describes the metal, not the owner. Choice B confuses a stamp with a coating; the paragraph praises metals as already "durable." Choice D is not in the source; the stamp reported the value, it did not raise it.
Question 3 of 20 · Multiple Choice
Paragraph 3 says that in Pennsylvania a dollar was counted as seven shillings and six pence. If 1 shilling equals 12 pence, how many pence was one dollar in Pennsylvania?
Answer: D
7 x 12 = 84 pence, plus 6 pence, is 90 pence. Choice A, 76, treats a shilling as 10 pence (7 x 10 + 6). Choice B, 84, forgets the extra six pence. Choice C, 96, is the New York value, eight shillings (8 x 12).
Question 4 of 20 · Multiple Choice
Use paragraph 3. A hat was priced at 16 shillings in New York. What was the same amount of money in Massachusetts shillings?
Answer: A
In New York 8 shillings made a dollar, so 16 shillings was 16 / 8 = 2 dollars. In Massachusetts a dollar was 6 shillings, so 2 dollars was 2 x 6 = 12 shillings. Choice B assumes a shilling was the same everywhere, the very confusion the paragraph describes. Choice C converts the wrong way (16 x 8 / 6 is about 21). Choice D stops at the number of dollars and calls it shillings.
Question 5 of 20 · Multiple Choice
Paragraph 3 says the new money of account used dollars, "dismes or tenths, cents or hundredths, and mills or thousandths of a dollar." How many mills equal one cent?
Answer: B
A cent is 1/100 of a dollar and a mill is 1/1,000, so one cent is (1/100) / (1/1,000) = 10 mills. Choice A is the number of mills in a disme (dime). Choice C is the number of mills in a whole dollar. Choice D flips the division: a mill is one-tenth of a cent, not the other way around.
Question 6 of 20 · Multiple Choice
Use paragraph 3. In which region was a single shilling worth the most?
Answer: C
In Georgia and South Carolina a dollar was only 4 shillings and 8 pence, the fewest shillings for one dollar, so each shilling there was the largest share of a dollar. Choice A reverses the reasoning: in New York it took the most shillings (8) to make a dollar, so each one was worth the least. Choices B (6 shillings) and D (7 shillings 6 pence) are in between.
Question 7 of 20 · Multiple Choice
Paragraph 4 quotes a Massachusetts court order: musket balls "shall passe current for a farthing a peece, provided that noe man be compelled to take above 12d. att a tyme of them." A farthing was one-fourth of a penny. What is the largest number of musket balls a person could be forced to accept in one payment?
Answer: A
12d. means 12 pence, and each penny is 4 farthings, so 12 x 4 = 48 farthings, or 48 musket balls. Choice B reads "12d." as 12 balls. Choice C divides 12 by 4 instead of multiplying. Choice D, 144, treats the 12 as shillings and multiplies 12 x 12 pence, then forgets the farthings.
Question 8 of 20 · Multiple Choice
Why would the court in paragraph 4 limit how many musket balls a person had to accept at one time?
Answer: B
At a farthing each, a payment of even a few shillings would mean hundreds of lead balls to carry and count: a carrying and counting cost. The limit kept musket balls for small change. Choice A reverses their value; a farthing was the smallest coin amount. Choice C is not in the order. Choice D is false: lead does not spoil.
Question 9 of 20 · Multiple Choice
In Source 2, why did Maya spend 25 minutes on Barter Day before she could get a bracelet?
Answer: B
Paragraph 2 says Leo "wanted granola bars, not comics," so there was no double coincidence of wants. Maya had to search for Priya and make two trades. Choice A describes Token Day; there was no price board on Monday. Choice C confuses the comic with the fake cardboard tokens of Thursday. Choice D is impossible: no money or tokens were allowed on Barter Day.
Question 10 of 20 · Multiple Choice
Sam asked, "Is one painted rock worth half a comic book?" and "Nobody could cut a comic book in half." Which transaction cost of barter does this show?
Answer: C
A comic loses its value if it is cut, so it cannot pay for something worth half as much. Tokens solve this: the comic is 6 tokens and the rock is 3. Choice A is Maya's problem, not Sam's. Choice B is the cardboard-token problem of Token Day. Choice D does not fit; comics and rocks do not spoil.
Question 11 of 20 · Multiple Choice
Source 2 lists 5 kinds of goods. On Barter Day, how many exchange rates would campers need to cover every pair of goods? On Token Day, how many prices did the board show?
Answer: D
Each pair of goods needs one rate: 5 x 4 / 2 = 10. The board listed one price for each good, 5 in all. Choice A swaps the two numbers. Choice B counts each pair twice (5 x 4 = 20). Choice C counts 5 x 5, pairing each good with itself too.
Question 12 of 20 · Multiple Choice
On Token Day, Maya started with 10 tokens, sold her comic to Priya and bought a bracelet from Leo. How many tokens did she have after those two trades?
Answer: A
She started with 10, earned 6 for the comic and spent 4 on the bracelet: 10 + 6 - 4 = 12. Choice B subtracts the bracelet but forgets the comic sale (10 - 4). Choice C adds the bracelet price instead of subtracting it (10 + 6 + 4). Choice D ignores her starting tokens (6 - 4).
Question 13 of 20 · Multiple Choice
Barter Day had 30 trades and Token Day had 84 sales, each in 90 minutes. Token Day had about how many times as many exchanges?
Answer: C
84 / 30 = 2.8. Choice A divides the wrong way (30 / 84 is about 0.36). Choice B is the difference, 84 - 30 = 54 more sales, written as if it were a multiple. Choice D comes from the 180% increase, (84 - 30) / 30 = 1.8, confusing "1.8 times more" with "2.8 times as many."
Question 14 of 20 · Multiple Choice
In paragraph 4 of Source 2, campers spent cardboard circles with drawn pine trees. Which plan best lowers the transaction cost this created?
Answer: D
The fake tokens created a checking cost: the counselors had to inspect tokens at the door. A mark that is hard to copy lets anyone trust a token at a glance, like the stamped metal in Source 1, paragraph 2. Choices A and B change prices or the number of tokens, not whether a token is real. Choice C gives more time but leaves the fakes.
Question 15 of 20 · Multiple Choice
On Friday, campers could trade leftover tokens at the camp store for snacks. Which job of money does this give the tokens?
Answer: D
Because tokens can still buy snacks after Trading Day, a camper can save them and spend them later without losing their value. Choice A names a different job; posting prices is about measuring value, not keeping it. Choice B is a feature of barter, not of money. Choice C is wrong: a wooden circle is not useful in itself; its value comes from being accepted.
Question 16 of 20 · Multiple Choice
Maya needed 25 minutes to get a bracelet on Barter Day and 6 minutes on Token Day. By what percent did her time fall?
Answer: A
The time fell by 25 - 6 = 19 minutes, and 19 / 25 = 0.76, or 76%. Choice B treats the 19 minutes saved as if it were a percent. Choice C, 24%, is 6 / 25, the share of the old time that she still needed. Choice D divides the 19 minutes by the new time (19 / 6 is about 3.17) instead of the old time.
Question 17 of 20 · Short Answer
Using Source 2, explain two different ways the tokens lowered transaction costs at Camp Juniper. Name each cost and give a detail or number from the scenario.
Model answer: First, tokens cut searching costs. On Barter Day Maya needed 25 minutes and two trades because Leo did not want comics; on Token Day she sold her comic to anyone who wanted it and paid Leo in tokens, taking 6 minutes. Second, tokens cut the cost of agreeing on value: one price board in tokens replaced the arguments about whether a rock was worth half a comic, and goods of different values could be paid for exactly (a 3-token rock, a 6-token comic). Rubric: 1 point for each cost named and supported with a detail (2 points); 1 point for explaining how tokens caused the change.
Question 18 of 20 · Short Answer
Source 1, paragraph 1, says barter "gave way in time, as exchanges increased." Explain why barter gets harder as a community trades more goods. Use one transaction cost and one number you calculate.
Model answer: As more goods are traded, it gets harder to agree on value, because barter needs a rate for every pair of goods. With 12 goods, barter needs 12 x 11 / 2 = 66 exchange rates, but money needs only 12 prices. It also gets harder to find someone who has exactly what you want and wants exactly what you have. Rubric: 1 point for a transaction cost explained; 1 point for a correct calculation used as support (any number of goods).
Question 19 of 20 · Short Answer
Compare the musket balls in Source 1, paragraph 4, with the stamped tokens planned for next summer in Source 2. Give one way each one is a good money and one way each one is a poor money.
Model answer: Musket balls were good for small change, since each was worth only a farthing, and lead lasts. They were poor for large payments, because many balls are heavy to carry and slow to count, which is why no one had to accept more than 12 pence of them at once. The stamped tokens are light and easy to check, because the metal stamp is hard to copy. They are poor money outside camp, since only Camp Juniper accepts them. Rubric: 1 point for each money with one strength and one weakness, tied to a transaction cost (2 points).
Question 20 of 20 · Short Answer
Money lowers transaction costs, but it does not remove them all. Name one transaction cost that remained on Token Day in Source 2 and one that remained with colonial money in Source 1. Explain each in a sentence.
Model answer: On Token Day, counselors still had to check tokens at a table by the door, which made a short line, a checking cost. In Source 1, people still had to convert prices because a dollar was counted as a different number of shillings in different states, a cost of agreeing on value. Rubric: 1 point for each remaining cost tied to its source (2 points). Accept other costs the sources support, such as the time to find a seller.
0 of 20 answered · 0 correct
06
Frequently Asked Questions
10 Questions
What does D2.Eco.5.6-8 mean?
D2.Eco.5.6-8 asks middle school students to explain how money makes trading easier by lowering transaction costs. The full text is "Explain ways in which money facilitates exchange by reducing transactional costs." It belongs to the Exchange and Markets part of the C3 Framework's economics indicators.
What are transaction costs, in simple terms?
They are everything a trade costs besides the price: the time spent finding a buyer or seller, the effort of agreeing on what is fair, the trouble of carrying goods, and the risk of being cheated. If you drive 30 minutes to buy a $20 book, the drive and the gas are transaction costs.
Why is barter so hard?
Barter works only when each person has what the other wants, which economists call a double coincidence of wants. Barter also needs a separate exchange rate for every pair of goods, and many goods cannot be split into smaller amounts. Money solves these problems because everyone accepts it, every price is written in one unit, and it divides into small amounts.
What are the three jobs of money?
Money is a medium of exchange (people accept it because they can spend it again), a unit of account (prices are measured in it) and a store of value (it can be saved and spent later). Each job lowers a different transaction cost: searching, agreeing on value and storing.
Did people really barter before money was invented?
Historians debate it. Older books, including Source 1, describe barter as the first stage of trade. Many anthropologists and historians now argue that early communities often relied on gifts and running credit among neighbors, and that barter was more common between strangers or when money was scarce. The lesson uses barter as a comparison, not as a claim about the first economies.
Why use colonial American money to teach D2.Eco.5.6-8?
Colonial America shows transaction costs clearly. Colonists used tobacco, furs, grain, wampum and even musket balls as money, and before the dollar a "shilling" meant a different amount in different states. Students can see each problem and how a single decimal money helped.
Is a debit card or a phone payment money?
Not exactly. A card or an app is a way to move money that sits in a bank account. It lowers carrying and counting costs even further, but it adds others, such as needing a bank account, a device and sometimes a fee. That makes it a good discussion question for the Good-Money Test in Activity 2.
How is D2.Eco.5.6-8 different from D2.Eco.5.9-12?
They cover different ideas. The grades 6-8 indicator is about how money lowers the cost of exchange. The grades 9-12 indicator with the same number asks students to describe the consequences of competition in specific markets. Both belong to the Exchange and Markets part of the economics indicators.
In which grade is D2.Eco.5.6-8 taught?
It depends on the school. The C3 Framework sets indicators for the end of grade 8, not for one grade, so this one may appear in a grade 6, 7 or 8 social studies course, often in a unit on early America, trade or personal finance.
What is a good quick check for D2.Eco.5.6-8?
Describe a short trading problem, such as someone who owns a bicycle and needs a haircut, and ask students to name the transaction cost and explain how money lowers it. If they name a specific cost and connect it to a feature of money, they are meeting the indicator.
07
Related Standards
5 standards
These standards connect to D2.Eco.5.6-8: prerequisites to review first, parallel standards at the same level, and next steps that build on it.
Before this lesson
RH.6-8.4Prerequisite
Determine the meaning of words and phrases in history and social studies texts
Use current data to explain effects of spending, production and the money supply
Lesson coming soon
Standard text: National Council for the Social Studies (NCSS), The College, Career, and Civic Life (C3) Framework for Social Studies State Standards: Guidance for Enhancing the Rigor of K-12 Civics, Economics, Geography, and History (Silver Spring, MD: NCSS, 2013). NCSS was not involved in the production of this lesson and does not endorse it.
