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Wize High School Grade 9 Math Textbook > Financial Literacy

What is Money?

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Money

Warm-up Scenario

Adam and Betty are on the playground trading candies. Adam has 15 jelly beans and Betty has 4 chocolate bas. Betty offers to give Adam 2 of her chocolate bars for 12 of his jelly beans, Adam agrees.

a) How many jelly beans is 1 chocolate bar worth to Adam and Betty?
Assuming that Adam and Betty want to trade any amount of candy and not just the set amount of 2 chocolate bars for 12 jelly beans, then we can solve this problem using ratios.

The ratio of chocolate bars to jelly beans is 2⏟chocolate bars  :  12⏟jelly beans\underbrace{2}_{\tiny{\text{chocolate bars}}}~~:~~\underbrace{12}_{\tiny{\text{jelly beans}}}

If we want 1 chocolate bar, we need to divide the numbers in the ratio by 2:
2⏟chocolate bars÷2:12⏟jelly beans÷21⏟chocolate bars:6⏟jelly beans\begin{array}{lcl} \underbrace{2}_{\tiny{\text{chocolate bars}}}\scriptsize{\colorTwo{\div 2}}&:&\underbrace{12}_{\tiny{\text{jelly beans}}}\scriptsize{\colorTwo{\div 2}}\\[1em] \underbrace{1}_{\tiny{\text{chocolate bars}}}&:&\underbrace{6}_{\tiny{\text{jelly beans}}} \end{array}
So, 1 chocolate bar is worth 6 jelly beans.

b) How many chocolate bars is 1 jelly bean worth to Adam and Betty?
The ratio of chocolate bars to jelly beans is 2⏟chocolate bars  :  12⏟jelly beans\underbrace{2}_{\tiny{\text{chocolate bars}}}~~:~~\underbrace{12}_{\tiny{\text{jelly beans}}}

If we want 1 jelly bean, we need to divide the numbers in the ratio by 12:
2⏟chocolate bars÷12:12⏟jelly beans÷1216⏟chocolate bars:1⏟jelly beans\begin{array}{lcl} \underbrace{2}_{\tiny{\text{chocolate bars}}}\scriptsize{\colorTwo{\div 12}}&:&\underbrace{12}_{\tiny{\text{jelly beans}}}\scriptsize{\colorTwo{\div 12}}\\[1em] \underbrace{\frac{1}{6}}_{\tiny{\text{chocolate bars}}}&:&\underbrace{1}_{\tiny{\text{jelly beans}}} \end{array}
So, 1 jelly bean is worth 1/6th of a chocolate bar.

c) If Cyrus joins the group and he has 2 bags of chips, how can the group decide how many jelly beans or chocolate bars a bag of chips is worth?
There are many ways Adam, Betty, and Cyrus can do this.

For example, Adam and Cyrus can decide on a fair trading ratio between jelly beans and bags of chips. Then separately, Betty and Cyrus can decide on a fair trading ratio between chocolate bars and bags of chips. Do you see any potential problems with this?

Another way is for the 3 of them to first decide on a fair trading ratio between chocolate bars and bags of chips. Then they can use the trading ratio of 2⏟chocolate bars  :  12⏟jelly beans\underbrace{2}_{\tiny{\text{chocolate bars}}}~~:~~\underbrace{12}_{\tiny{\text{jelly beans}}} to determine how many jelly beans a bag is chips is worth.

Alternatively, the 3 of them can first decide on a fair trading ratio between bags of chips and chocolate bars. Then use the trading ratio for chocolate bars and jelly beans to determine the trading ratio for bags of chips and chocolate bars.

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What is Money?

A long time ago, when people wanted to trade goods or services for other goods or services, they had to barter.

For example
  • You can trade 1 jelly bean for 1/6th of a chocolate bar
  • You can trade 2.5 bags of potatoes for the service of someone fixing your car

To make trading easier, money was invented as a standard of value. Now, people can trade a certain amount of money for goods and services.

For example
  • You can buy a chocolate bar for $2
  • You can pay a mechanic $65.50 to fix your car

Forms of Money

Money does not just come in coins and bills, it can be a number in your bank account, a piece of paper in the form of a cheque, or an I.O.U. note from a friend.
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What is Currency?

Different countries use different systems of money, this is called currencies. Here are a few examples:
Check out the full list of currencies here.
By exchanging from one currency to another, we can now buy goods and services around the world!

Practice: Currency Exchange

Nicole is planning to visit Japan and needs to exchange some CAD to yen before her trip. She googles the conversion rate between the Canadian dollar and the Japanese Yen and finds the following information:

Answer the following questions using this information.
If Nicole wants to exchange $510 CAD, how many yen can she get?