If a Ten Year Old Asks Me Why a US Dollar Costs 60 INR
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If a ten year old asks me why a US Dollar costs 60 INR, how should I explain it? Y: You, C: Child Ask the 10 year old: "If you had only 10 rupee notes, and wanted to buy a chocolate of Rs. 20 what would you do?" Child will say - "Give the shopkeeper 2 notes" Y: "Let's go to another shop. What would you do if a better chocolate costs Rs. 50 there?" C: "I will give shopkeeper 5 notes" Y: "Good, There's another shop called XYZ which sells the best chocolate at Rs. 500 and accepts nothing but Rs. 100 notes. It is indeed an awesome chocolate that you will really like. What would you do then?" C: "Give him 50 notes" Y: "Remember the shopkeeper accepts only Rs. 100 notes?'" C: "But I will give him the same amount of money!!" Y: "But he uses a different system, he runs his shop only on 100 Rupee notes. But you have only 10 rupee notes. Are they of any value if you want to do business with the shop?" C: "No. I might have to take 5*100 rupee notes from someone and give him 50 notes in return" Y: "Good!! Let us say a man is standing outside the shop offering 100 rupee notes in exchange for 10 rupee notes..then?" C: "Wow!! I will give 50 notes to him, and take 5*100-rupee notes" Y: What if the person says 'Everybody seems to like the chocolate here. Everybody wants 100 rupee notes. I want 60 notes for 5*100 notes'. Now C starts thinking. Y: You really want the chocolate. Meanwhile another person comes and tries to buy his 100 rupee notes. If you do not buy his note quickly - he might ask for even more notes because, many people want to buy his notes Y: "Did the value of the chocolate change?" C: "No" Y: "Did you have less money?" C: "No" Y: "Then what was the problem?" C: "The shopkeeper wants only 100 Rupee notes!!! :( " Y: "But finally did you end up paying more than 500 rupees for a 500 rupee chocolate?" C: "yes!!! :(" Y: "Why? The chocolate price never changed!" C: "The chocolate price remained the same. But the price of the 100 rupee note was more!!! :( " Y: "That is what happens. The shop is USA. Lets call the 100 rupee note as theDollar. Other
If a Ten Year Old Asks Me Why a US Dollar Costs 60 INR
If a ten year old asks me why a US Dollar costs 60 INR, how
should I explain it?Y: You, C: ChildAsk the 10 year old: "If you
had only 10 rupee notes, and wanted to buy a chocolate of Rs. 20
what would you do?"Child will say - "Gie the shop!eeper 2 notes"Y:
""et#s $o to another shop. %hat would you do if a better chocolate
costs Rs. &0 there?"C: "I will $ie shop!eeper & notes"Y:
"Good, 'here#s another shop called ()* which sells the best
chocolate at Rs. &00 and accepts nothin$ but Rs. 100 notes. It
is indeed an aweso+e chocolate that you will really li!e. %hat
would you do then?"C: "Gie hi+ &0 notes"Y: "Re+e+ber the
shop!eeper accepts only Rs. 100 notes?#"C: ",ut I will $ie hi+ the
sa+e a+ount of +oney--"Y: ",ut he uses a different syste+, he runs
his shop only on 100 Rupee notes. ,ut you hae only 10 rupee notes.
.re they of any alue if you want to do business with the shop?"C:
"/o. I +i$ht hae to ta!e &0100 rupee notes fro+ so+eone and $ie
hi+ &0 notes in return"Y: "Good-- "et us say a +an is standin$
outside the shop offerin$ 100 rupee notes in e1chan$e for 10 rupee
notes..then?"C: "%ow-- I will $ie &0 notes to hi+, and ta!e
&0100-rupee notes"Y: %hat if the person says #2erybody see+s to
li!e the chocolate here. 2erybody wants 100 rupee notes. I want 30
notes for &0100 notes#. /ow C starts thin!in$. Y: )ou really
want the chocolate. 4eanwhile another person co+es and tries to buy
his 100 rupee notes. If you do not buy his note 5uic!ly - he +i$ht
as! for een +ore notes because, +any people want to buy his notesY:
"6id the alue of the chocolate chan$e?"C: "/o"Y: "6id you hae less
+oney?"C: "/o"Y: "'hen what was the proble+?"C: "'he shop!eeper
wants only 100 Rupee notes--- 78 "Y: ",ut finally did you end up
payin$ +ore than &00 rupees for a &00 rupee chocolate?"C:
"yes--- 78"Y: "%hy? 'he chocolate price neer chan$ed-"C: "'he
chocolate price re+ained the sa+e. ,ut the price of the 100 rupee
note was +ore--- 78 "Y: "'hat is what happens. 'he shop is 9:..
"ets call the 100 rupee note as theDollar. ;ther shops are India.
'hey accept your 10 rupee note. 'he #alue# lies in the thin$. 4oney
is I will sae your blessin$s for +yfuture children thou$h 7> .nd
I a+ hopin$ +y answers do not +a!e +eloo! +uch older than I a+---
7>You --> Y. Child --> CC: "What is infation?"Y: "Re+e+ber
how +uch we paid for each of your school note boo!s last year?"C:
")es, 2D rupees"Y: "%ell, this year it is 23 rupees. Erice has
increased by 2 rupees. Re+e+ber we used less onions in our food 3
+onths a$o?"C: ")es. 4o+
