Basic Terms in Financial Literacy:

Money:

Money is a recognised medium of exchange in the economy. It is an asset that can be stored and used in the form of currency, or as value.

Currency:

Currency is the physical form of money and is in the form of coins and rupees. Each country has its own currency as a medium of exchange, issued by the central bank.

In India, the Government of India (GoI) and Reserve Bank of India (RBI) are the issuers of the currency, i.e. Indian Rupees

Bank:

A bank is a government authorised financial institution which acts as a custodian of money deposited by account holders and uses the collected funds to extend loans to individuals and businesses while charging interest on the same.

Account:

An account is a repository of the funds held by a bank on behalf of the account holder. An account can be of various kinds and is identified by a unique account number issued to the account holder.

Saving:

Savings is the amount of money that is remaining from income, after the expenses are made.

Investment: An investment refers to an asset acquired with the objective of generating income or

Appreciation.

 

Every purchase requires the use of money.

Money is the accepted medium of exchange. It allows you to buy the things you require from pin to ship, going from one place to another, watching a magic show or movie in a theatre etc.

In our country, money is used in the form of Indian currency known as ‘Rupee’.

 

Barter System

Exchange of goods for goods is called Barter System. Barter took place even before the money came into existence.

Example: Exchange of a chocolate for a fancy pen from a friend.

 

Needs:

Needs are the essential requirements in our life.

Example: food, clothes and house.

Wants: Wants are for the things you require to enhance the quality of your life.

Example: Sports equipment, music instruments and Video Games.

 

Basic Terms in Financial Literacy Class 6

Evolution of Trade

Trade:

Trade is a financial activity that includes buying and selling various goods and services between two or more people involved in the transaction.

Trade can happen between individuals, organisations and countries.

Example: India exports rice and jewellery, and imports petroleum and electronic components.

The evolution of trade across the world has been closely linked with the development of the money system.

Following points are important regarding the evolution of trade:

  1. Various commodities were used for facilitating exchange like livestock, salt, metal, rare stones.
  2. Pottery traditions were popular in parts of the world such as Japan, Korea, China, Mexico.
  3. The oldest route of international trade in the world was developed by Han Dynasty for trade between China and Central Asia. It was popularly known as Silk Route. The Han Dynasty, ruled China from 206 BC to 220 AD.
  4. The first non-stop voyages from Egypt to India were initiated at the start of the Common Era.
  5. Spices from India were the main exports to the western world that led to new diplomatic relationships between East and West.
  6. Christopher set out in 1492 with Spice Trade in his mind and discovered America.

 

Concept of Team and Its Benefits

Banking

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