Prior to the establishment of modern central banking and standardized paper currency in Nigeria, pre-colonial commercial transactions relied heavily on commodity monies such as cowrie shells, manillas, and brass rods. Which of the following best explains the primary economic limitation associated with using these commodity currencies for long-distance commerce?
- Their high bulkiness and weight relative to value, which imposed severe transportation and transaction costs on long-distance tradeCevap
- BTheir complete inability to facilitate local retail trade, which restricted commercial activity exclusively to international commodity barter
- CTheir legal restriction strictly to compensating personal direct service providers, which prevented their application in physical goods exchange
- DTheir exclusive alignment with secondary manufacturing industries, which prevented agricultural producers from using them in trade
Cevap
Their high bulkiness and weight relative to value, which imposed severe transportation and transaction costs on long-distance trade
The correct answer highlights that commodity currencies like cowrie shells and manillas had low value-to-weight ratios. Accumulating enough currency for substantial commercial purchases required transporting enormous bulk, incurring heavy transaction costs and logistical hurdles during long-distance trade, which eventually led to the adoption of coin and paper money.
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Limitations of pre-colonial commodity currency in commercial evolution
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