Arrange the following events of goldsmith Lala’s story in the order in which they take place:
(A) The paper receipts issued by Lala begin to circulate as money.
(B) People of the village keep their gold with Lala for safe-keeping.
(C) Lala issues paper receipts to the people and charges a small fee.
(D) Lala lends gold to Ramu, as all depositors will not withdraw their gold at the same time.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (B), (C), (A), (D)
(B) People of the village keep their gold with Lala for safe-keeping. — First, the villagers bring their gold to Lala.
(C) Lala issues paper receipts to the people and charges a small fee. — Receipts are given in return for the gold kept, so this follows (B).
(A) The paper receipts issued by Lala begin to circulate as money. — Once people hold receipts, they slowly start paying with them.
(D) Lala lends gold to Ramu, as all depositors will not withdraw their gold at the same time. — Only then does Lala lend the gold, which creates money.
NCERT (2026-27): “Commercial Banks … Once there was a goldsmith named Lala in a village. In this village, people used gold and other precious metals in order to buy goods and services. In other words, these metals were acting as money. People in the village started keeping their gold with Lala for safe-keeping. In return for keeping their gold, Lala issued paper receipts to people of the village and charged a small fee from them. Slowly, over time, the paper receipts issued by Lala began to circulate as money. … Now, let us suppose that Lala had 100 Kgs of gold, deposited by different people and he had issued receipts corresponding to 100 kgs of gold. At this time Ramu comes to Lala and asks for a loan of 25 kgs of gold. …” |