From Barter to Money
1. What is the barter system, and how does it function?
Answer: The barter system is a method of exchanging goods and services directly without using money. For example, a person with an extra eraser can trade it for a pencil if someone else needs the eraser and has a pencil to offer.
2. Why was the barter system considered the earliest form of exchange?
Answer: The barter system was the earliest form of exchange because it was used before money existed, with people trading goods like cowrie shells, salt, or cattle to meet their needs.
3. What is meant by the term “double coincidence of wants”?
Answer: Double coincidence of wants refers to a situation in the barter system where two people must each have something the other wants and are willing to trade, like trading wheat for shoes.
4. Why is money called a medium of exchange?
Answer: Money is called a medium of exchange because it is widely accepted by people to buy and sell goods and services, making transactions easier than bartering.
5. How does money solve the problem of divisibility in the barter system?
Answer: Money solves the problem of divisibility by allowing goods to be exchanged in smaller, precise amounts. For example, you can pay a small amount of money for a sweater instead of trading an entire ox.
6. What is the significance of money as a store of value?
Answer: Money acts as a store of value because it can be saved and used later without losing its worth, unlike perishable goods like wheat, which may rot.
7. How does money serve as a common standard measure of value?
Answer: Money provides an agreed-upon unit, like rupees, to measure and compare the value of goods and services, making it easier to determine fair exchange rates.
8. What is the role of money as a standard of deferred payment?
Answer: Money allows payments to be made later for goods or services received now, such as paying for a book in installments, which is not possible in bartering.
9. What were some unusual commodities used as money in the past?
Answer: Unusual commodities used as money included cowrie shells, red feather coils (tevau), giant stone discs (Rai stones), and Aztec copper tajadero.
10. Why did coins become a popular form of money in ancient times?
Answer: Coins became popular because they were made of durable precious metals like gold and silver, were portable, and had standardized values, making trade easier.
11. What were kārṣhāpaṇas or paṇas in ancient India?
Answer: Kārṣhāpaṇas or paṇas were ancient Indian coins made from precious metals or their alloys, with symbols called rūpas punched on them.
12. How did the use of alloys improve the quality of coins?
Answer: Alloys, made by combining metals like silver and copper, made coins stronger, more durable, and resistant to wear, ensuring they lasted longer.
13. What symbols were commonly found on ancient Indian coins?
Answer: Ancient Indian coins often had symbols like animals, trees, hills, kings, queens, deities, or specific motifs like the Varaha image on Chalukya coins.
14. How did the discovery of Roman coins in India reflect ancient trade?
Answer: The discovery of Roman coins in places like Pudukkottai and Kerala indicates that ancient India had active maritime trade with the Roman Empire, favoring India’s economy.
15. Why was paper money introduced as an alternative to coins?
Answer: Paper money was introduced because carrying and storing large numbers of coins was difficult, and paper was lighter, more portable, and suitable for higher denominations.
16. What is the role of the Reserve Bank of India (RBI) in currency issuance?
Answer: The Reserve Bank of India (RBI) is the sole authority in India that legally issues and controls the distribution of paper currency and coins.
17. What is digital money, and how is it used today?
Answer: Digital money is electronic money that cannot be touched, like funds in a bank account. It is used through methods like UPI, debit cards, and net banking for transactions.
18. How do QR codes facilitate modern payments?
Answer: QR codes allow quick, digital payments by enabling customers to scan a code with their smartphones, transferring money directly to the seller’s bank account.
19. What cultural significance does the Junbeel Mela hold in Assam?
Answer: The Junbeel Mela is a socio-cultural fair in Assam where tribal communities barter goods like roots, herbs, and handmade artifacts, fostering community ties and preserving traditions.
20. How does the Indian rupee symbol reflect national identity?
Answer: The Indian rupee symbol, adopted in 2010, combines the Devanagari “Ra” and Roman “R” with two horizontal stripes resembling the national flag, symbolizing India’s cultural and national identity.
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