General Knowledge · Class 11 · Culture, art and sport
Money and the economy
If you keep ₹1,000 in a box for ten years, you still have ₹1,000. Why can it buy less?
Small test at the end: scroll down to the end of this page for five short questions that check what you have learnt. Tap an answer, then press Check answer. Go to the questions ↓
Jump to: Read first · Try it away from the screen · Check it yourself · Check yourself · For teachers
Read first
6 facts. The questions below make you use them, not just remember them.
- Before money, people bartered: swapping goods directly. Barter only works if each side wants what the other has. Money solves this.
- India's earliest coins, punch-marked silver coins, are about 2,500 years old.
- The Reserve Bank of India, set up in 1935, issues bank notes, looks after the banking system and changes interest rates to control rising prices.
- Inflation means prices rise over time. If prices rise 6% a year, they roughly double in about 12 years.
- With compound interest, you earn interest on the interest as well. Over many years this makes savings grow much faster than simple interest.
- Gross Domestic Product (GDP) is the total value of goods and services a country produces in a year. India is one of the five biggest economies in the world.
Offline
Try it away from the screen
Ask an elder what a few things cost when they were your age: a cup of tea, a bus ticket, a film. Compare with today's prices. Work out how many times more each costs now.
Make it on paper. Keep it with you. Nothing to upload.
Check it yourself
Messages promising "double your money in a month" are almost always scams. Check whether a company is registered with the RBI or SEBI, and remember that higher returns always come with higher risk.
Check yourself
Five questions about what this page teaches. Choose an answer and press Check answer, or open "See the answer and why". Nothing is saved or sent: your choices stay on this screen and disappear when you leave or reload the page.
How do you want to answer? You choose, and you can change at any time.
See the answer and why
- A. The Reserve Bank of India Correct. Yes. The ₹1 note is the only one issued by the Government of India.
- B. The State Bank of India, the country's biggest bank Not this one. The SBI is a commercial bank. It does not issue notes.
- C. Each state government Not this one. States do not issue money.
- D. The Ministry of Finance Not this one. The Ministry issues coins and ₹1 notes; the RBI issues other notes.
See the answer and why
- A. ₹11,000 Not this one. That is after only one year.
- B. ₹20,000 Not this one. That would be 100% interest, not 10% a year for two years.
- C. ₹12,100 Correct. Yes. Year 1: +₹1,000 = ₹11,000; year 2: +₹1,100 = ₹12,100.
- D. ₹12,000 Not this one. That is simple interest. With compound interest the second year earns interest on ₹11,000.
See the answer and why
- A. It turns into ₹2,000 Not this one. Money in a box does not grow.
- B. It buys less each year Correct. Yes. Inflation reduces what the same money can buy.
- C. It buys more each year Not this one. With rising prices, it buys less.
- D. It stays exactly as useful as before, because the note is the same Not this one. The number stays the same, but what it buys falls.
See the answer and why
- A. It needs a bank to approve every swap before it can happen Not this one. Barter needs no bank at all.
- B. Goods are always heavier than coins Not this one. Weight is a smaller problem than finding a matching trade.
- C. Each side must want what the other has Correct. Yes. Money removes the need for that match.
- D. It is against the law everywhere Not this one. Barter is legal; it is just hard to use.
See the answer and why
- A. How many people have jobs Not this one. That is the employment rate.
- B. How happy people are Not this one. GDP measures production, not happiness.
- C. The value of goods and services a country produces in a year Correct. Yes. It is one way to measure the size of an economy.
- D. How much gold a country keeps Not this one. Gold reserves are different from GDP.
For teachers and grown-upsWhere the facts come from, and how to use this round.
Sources and notes
- RBI established 1 April 1935 under the RBI Act, 1934. The ₹1 note is issued by the Ministry of Finance.
- Rule of 72: years to double is about 72 ÷ rate. Point out that GDP ranks vary by source and year (IMF, World Bank).