(a) Distinguish between a cheque and a bank note [8 marks]
(b) What are the main problems of trade by barter? [12 marks]
Explanation
(a) A cheque is an Instruction in writing made upon a bank to pay a given sum of money to a named person or bearer, at a specific date. Whereas, bank notes are legal tenders that is, notes issued by the central bank to be legally used as means of payment for goods and services.
(b) The main problems of trade by barter are:
(i) The problem of lack of double co-incidence of wants.
(ii) No common standard of value
(ii) The problem of storing goods discourage large scale production.
(iv) Indivisibility of bulky goods.
(v) No standard for deferred payment
(vi) Does not encourage specialization.