Give short answers:
1. Why was money invented?
(i) At home planning the expenses is based on the monthly incomes, pending expenditure, savings, payment of interest etc.,
(ii) The budgets of a country or states are also framed on the basis of money.
(iii) The government, as well as, private institutions and industries calculate their financial status through money.
(iv) A common item with a standard value for the effective exchange of goods was needed. Therefore money was invented.
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2. What is ancient money?
(i) The metals can be termed as first form of currency.
(ii) Gold, Silver and Copper were the metals used first.
(iii) They were called ancient currency.
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3.What were the items used as barter during olden days?
➤ Grains
➤ Cattle
➤ Salt
➤ Leather
➤ Beads
➤ Shells
➤ Tobacco
➤ Corn and even Slaves.
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4. What is spice route? Why was it called so?
(i) Spice route was an ancient trade route followed by merchants, importers and exporters.
(ii) The merchants followed spice routes of both land and sea from Malabar in India as far west as Morоссо.
(iii) Pepper, Spices, Pearls, Gems, Rubies and Muslin clothes were exported from the eastern sea of Tamil Nadu.
(iv) Pepper and spices took a major share of the exports.
(v) Thus this route was called the spice route.
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5. What is natural money?
Silver and gold gained importance all over the world.
These metals were used as standard value in the exchange of goods.
This was called "Natural Money"
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6. Why were coins of low value printed in large quantities?
(i) There were insufficient reserves of gold and silver.
(II) Mines also had a limited reserve of these metals.
(iii) An alternative was found and coins were made using metals with lesser value.
(iv) These were used to buy and sell goods of lesser value.
(v) It was used as the money of the poor people.
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7. What is meant by foreign exchange?
(i) Currency is the medium of exchange in a country.
(ii) The Indian currency is called the Indian Rupee.
(iii) In a country the foreign currency is called foreign exchange.
(iv) Purchasing capacity of all currencies in the world are compared using the US dollar as the standard currency.
(v) This value differs from country to country.
(vi) Most of the international trade transactions are carried out in US dollar
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Answer in detail
1. Explain how money is transacted in the digital world.
(i) One has to visit the bank and fill in a challan or produce a cheque to withdraw money from his account.
(ii) Now this practice is gradually vanishing.
(iii) Instead, one can easily withdraw the necessary amount from an Automated Teller Machine (ATM), with the help of an ATM debit card.
(iv) One can easily withdraw the money needed at any time at ATMs located everywhere.
(v) A person can deposit money in their account without visiting the branch.
(vi) Similarly, credit cards are also available, through which things are bought on credit and the amount can be paid later.
(vii) Now a days, instead of using cheques or Demand Drafts (DDs), online transactions through net banking are carried out.
(viii) Through this, money is transacted to anyone who lives anywhere across the globe.
(ix) Technology has advanced so much that even mobile banking is widely used nowadays.
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2.Explain in detail about the role of RBI in the country.
A government has the responsibility to regulate money supply and oversee the monetary policy.
Hoarding of money must be avoided at all costs in a country's economy.
Only then money can be saved in banks.
All the major and important banks were nationalised (1969) in India.
The Reserve Bank of India (RBI) regulates the circulation of currency in India.
The Reserve Bank of India started its operations on 1 April 1935.
It was permanently moved to Mumbai from the year 1937.
RBI was nationalised in 1949.
85% of the printed currency is let for circulation.
According to the statistics available as on August 2018, currency worth of 19 lakh crore are in circulation.
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3. Write in detail about the various functions of money.
(i) When money replaced the barter system, a lot of practical issues were solved.
(ii) Money acts a medium of exchange, a unit of measurement, a store in value and a standard of deferred payments.
(iii) It plays an important role in transactions.
(iv) Medium of Exchange - Money should be accepted liberally in exchange of goods and services in a country.
(v) Unit of Account - Money should be the common, standard unit of calculating a country's total consumer goods, products, services etc. For example, if a book costs 50, it means that the price of the book is equal to 50 units of money. Money is used to measure and record financial transactions in a country.
(vi) A Store of Value - Money is used as a store of purchasing power. It can be used to finance future payments.
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