How would you explain these terms to children between the ages of 6 and 12?

Question

-Trade
-Debt
-Subsidies

Thanks!

I'm sorry - I should have made it clearer. I would like to explain these to the children at a global context.. trade and debt between countries...subsidies from a government...

Answer 1

Give two or more children 100 pennies.
Place toys in front of each.
Trade:
Child A, "sells", gives Child B, a toy.
If the value of both toys are equal, neither owes the other anything more.
If the toy from Child A, is worth more than the toy from child B, then, child B, owes child A, the difference.
B has a "debt" to A, for the difference.

Now, Child B gives another toy to A, for the debt. If the value of the toy is equal to the debt, all is even again.
But, if the toy from B is more than the debt, then A, now owes B, a debt for the difference.

Now, one or the other can decide at some point that they want to pay the debt difference in cash. So one gives some pennies to the other and all is even again.

At some point, one pays cash to another for every thing without "selling" something to the other, and runs out of cash. S/He has no credit to borrow money, and no one will "sell", give him/her any more toys.
And because they are out of cash, broke, they need help.
So all the other traders and sellers just give the other some cash, knowing that they cannot repay it as a loan. So they have subsidized the other one.

Another way they can subsidize, is for the government or one with lots of cash, to pay some cash to the people who manufactured the toys so that they can sell them to another at a cheaper price and let them sell at a lower price than competitors and /or make more profit than others.

I don't know if a 6 year old or a 12 yr old can grasp this.
As we all know, very little in trade is consumated with cash. Debts for unbalanced trade is generally just carried on the books, in hopes that further trade will balance out eventually.

Answer 2

Trade: When you give somthing to someone else. In return, they give you an item of their own.

Debt: When you owe money to someone

Subsidies: Money given from one person to another.

I'm not sure how to explain the last one. I looked it up, but it didn't seem to help.

Answer 3

With very specific examples.