How Does Money Work in Everyday Life?
Money is the medium of exchange that is used to buy and sell grocery items, kids toys or anything. We use different forms of money like coins, notes and digital payment to pay for buying things.
Indian Currency
Different Currencies
Currency is a type of money that is used in different countries as a different form of money, below are the list of some countries and their currencies.
When people travel from one country to another country firstly they convert money into their respective country currency at local banks or credit unions.
When we convert one currency into another currency a conversion factor multiplies in our money.
E.g 1 indian rupee = 0.013 United States Dollar here 0.013 is conversion factor.
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Types of Notes and Coins Used in India
There are different types of notes and coins used in india.
Some examples of notes and coins:-
1 Rupee Note and Coin
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2 Rupee Note and Coin
5 Rupee Note and Coin
100 Rupee Note
200 Rupee Note
500 Rupee Note
2000 Rupee Note
Conversion of Rupee and Paise
To convert the rupee amount into paise we multiply the amount with 100.
E.g Rs 5 rupee convert into paise multiply 5 with 100 that will 500 paise.
1 Rupee = 100 Paise.
Now, 5 Rupee = 5 $\times $ 100 Paise.
So 5 rupee = 500 Paise.
To convert the paise amount into rupee we divide the amount by 100.
E.g 450 paise = 450/100 = 4.50 rupee.
How to Read Rupee and Paise.
The amount of money can be written in two ways
1. In figures
2. In word
In figure dot (.) separate the rupee and paise here most of the students make mistakes in writing 50 paise and 5 paise.
Note: If paise is in less than 10 paise then write zero before paise like 8 paise 0.08 not 0.8.
Addition and Subtraction of Money
Money having rupee and paise together can be added by the addition of money, there are different ways we can add money one is that converting money into paise and then adding or without converting adding by the normal addition method.
E.g Rs. 4.50 + Rs. 7.35 (By converting in paise)
450 paise + 735 paise = 1185 paise
Then convert added money in rupee Rs. 11.85.
Solved Examples
Example 1. In Exchange for Rs. 5 coin how many 50 paise coins will you get?
Ans: Given Rs. 5 coin
First we have to convert Rs. 5 coin in paise.
To convert rupee into paise we have to multiply with 100 to the rupee.
Rs. 5 coin = 5$\times$ 100 = 500 paise.
So 500 paise = 50 paise $\times$10
Hence Rs. 5 coins will equal ten, 50 paise coins.
Example 2. How many Rs. 200 notes are needed to purchase a school bag that costs Rs. 1000?
Ans: Given that school bag costs = Rs. 1000
So, we can write this Rs. 1000 = Rs. 200 $\times$ 5.
Hence five 200 notes are required to purchase a school bag.
Example 3. Write sixty-five rupees and seven paise in numerals.
Ans: Sixty-five rupee and seven paise in numerals.
As we know that to separate rupee and paise we use dot(.).
Sixty-five rupee and seven paise = Rs. 65.07
Summary
Knowing about Money is an important part of the skill for kids. They are important topics to learn as kids will remember and carry them with them for higher classes as well as for life long. Allowing kids to know different types of notes and coins and their value for buying anything is very important. Especially for kids, It is fun, engaging, and fundamental to their knowledge of money and its different forms. e.g Money in the form of notes , coins and digital money.
Learning By Doing
Add the note and coin given below and also write how many Rs. 10 rupee note and Rs. 5 coin required for added money.
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FAQs on What Is Money? Types of Notes and Coins in India
1. What is money and how is it used?
Money is anything widely accepted as payment for goods and services or to pay debts. It functions as a
- medium of exchange
- store of value
- unit of account
2. What are the main types of money?
The main types of money are
- cash (coins and paper bills)
- bank deposits (savings and checking accounts)
- digital money (cryptocurrencies and online payments)
3. Why is money important in everyday life?
Money is important because it allows individuals and businesses to buy necessities, save for future needs, and pay for services. It simplifies transactions and helps people manage their budgets and achieve their financial goals efficiently.
4. How does money hold its value?
Money holds value because people trust that it can be exchanged for goods and services. Its value depends on stability, government backing, and controlled supply, which prevent inflation from eroding its purchasing power over time.
5. What is the difference between money and currency?
Money is a broader term that includes anything accepted as payment, like coins, bank records, or digital assets. Currency specifically refers to physical money, such as coins and banknotes issued by a country's government or central bank.
6. How is money created in the economy?
Most money is created by banks through lending. When a bank gives out a loan, it increases the borrower's deposit, effectively creating new money. Central banks also create physical currency that circulates in the economy.
7. What is the role of banks regarding money?
Banks play a key role by safeguarding deposits, providing loans, and facilitating payments. They also help create money by lending and are essential in the functioning of the modern financial system to ensure economic stability and growth.
8. How does inflation affect the value of money?
Inflation reduces the purchasing power of money because prices for goods and services rise over time. If inflation is high, each unit of money buys fewer items, making saving more difficult and affecting everyone in the economy.
9. What are common ways people save money?
People save money by
- using savings accounts
- investing in stocks or bonds
- setting aside emergency funds
10. Can digital currencies replace traditional money?
Digital currencies like cryptocurrencies are becoming more popular, but they have not fully replaced traditional money. Issues such as regulation, stability, and acceptance need to be resolved before they can serve as the main form of payment worldwide.
11. What is a unit of account in terms of money?
A unit of account is a function of money that lets people measure and compare the value of goods and services. It provides a common standard, making it easier to set prices, record debts, and make economic decisions.
12. How do exchange rates affect the value of money globally?
Exchange rates determine how much one currency is worth compared to another. When exchange rates change, the purchasing power of money for international transactions changes, affecting travel, trade, and investments across different countries.
