Posts Tagged ‘basics of economics’

We all know economical development is the foundation for development of Humankind. The never ending mismatch of Demand and supply is the cause for all economic activities around the world.

Earlier when humans were living in forest, their primary requirement was food and shelter. After some time,came a period referred in history as  Stone age. So many great inventions came during that time  like knife made of sharp stones and other invaluable inventions. With those inventions man went for Hunting for food. Over a period of man’s necessities made him to invent more things like Wheel, vehicle,etc. which helped us to move around different places. Then with his inventions he learned to involve agricultural activities and produce commodities. Over a period of time man got specialized in producing certain commodities.Image

Then they started to exchange goods for goods with different groups of people .This system is called “Barter system”. They exchanged rice for wheat, and sugar for salt. Since seasonal factors are involved in production of goods they were in need of some other thing, which holds value until they produce and exchange goods. So there came the role of MONEY. They considered the Money or currency that they holds some value which will be acceptable for exchange of goods later period. Money doesn’t hold any value of its own, the main purpose of money is medium for exchange of goods. (more…)