Question

ncert assignment file on chapter 3 of economic for class X

Answer 1

Money as a medium of exchange

• Money is an item which is used as a medium of exchange. In modern economy, money is work as an intermediary. It is used as a medium of exchange for goods and services. It is also used for payment of debts.

• Introduction of money replaced the batter system. Before the introduction of money, Indians used grains and cattle as money. In a barter system, selling and purchasing of goods and services was done with “double coincidence of wants” i.e by fulfilling mutual wants without the use of money. In this system goods and services was exchanged for another goods and services. It was also known as CC economy i.e commodity for commodity economy.

Modern form of money

(i) Currency

• Modern forms of money include currency — paper notes and coins. The modern coins are not made with the precious metals like gold, silver. The real values of the modern coins are less than its face value. Currency notes are also used as a medium of exchange in modern economy. The currency notes are made with paper. The real values of the currency notes are less than its face value.

• The currency is authorized by the government of the country. So, it is used as a medium of exchange and accepted by the others. In India, Reserve bank of India has authority to issue currency notes on behalf of the central government. In India, no individual can legally refuse to accept the rupees issued by the Reserve bank of India.


(ii) Deposits with Banks

• Deposits with Banks are also a form of money. A person can deposit in the bank by opening an account on his/her name. People need only some money at a point of time. So, people can deposit extra money and earn extra money, which is given on money already depositing in bank.