Money performs several primary, secondary, and contingent functions. However, in order to perform these functions, it must possess certain qualities. In this article, we will talk about the qualities of good money.
An important quality of money is its acceptance. Good money requires acceptance to all without any hesitation. Since the law declares Money as the legal tender, it has an inherent quality of general acceptability.
Apart from its acceptance, good money also requires portability. If people can carry or transfer money from one place to another, then it is good money.
Acceptance and portability aside, the material used to make money must last for a long time without losing its value. For example, ice and fruits are not good money since they lose their value quickly with the passage of time. After all, ice melts and fruits perish. Therefore, durability is an essential quality of good money.
Talking about the qualities of good money, it is important to remember the divisibility of money. If someone wants to buy asmaller unit of a commodity, then divisibility of money can make it possible. For example, cows cannot function as good money. This is because you cannot divide a cow without making it lose its value.
Look at two 100 rupee notes. They look and feel identical, right? They also have the same value. In fact, nobody can distinguish between two currency notes right out of the mint.
This is an important quality of good money – hom*ogeneity. If money is not hom*ogeneous, then transactions will become uncertain as people would beunsure of what they are receiving.
The ability to recognize money is critically important. Today, we can look at a currency note and tell its value. If money is not cognizable, then people can find it difficult to determine if they are dealing with money or some inferior asset.
Of all the qualities of good money, stability is probably the most essential one. The value of money cannot change for a long period of time and hence remain stable. If the value of money keeps changing, then it will fail to function as a measure of value and as a standard of deferred payment.
For the purpose of policy-making, we can define money as the set of liquid financial assets, the variation in the stock of which can have an impact on the aggregate economic activity. Statistically, money can include certain liquid liabilities of a particular set of financial intermediaries or other issuers. Like most countries, India also has various monetary and liquidity aggregates as listed below:
Money is defined as a unit of measure that is generally accepted and recognized as a medium of exchange in the economy. For a commodity or currency to be recognized as money, it must be fungible, stable, recognizable, portable, and durable.
Money is defined as a unit of measure that is generally accepted and recognized as a medium of exchange in the economy. For a commodity or currency to be recognized as money, it must be fungible, stable, recognizable, portable, and durable.
There have been many forms of money in history, but some forms have worked better than others because they have characteristics that make them more useful. The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability.
In order for money to function well as a medium of ex- change, store of value, or unit of account, it must possess six characteristics: divisible, portable, acceptable, scarce, durable, and stable in value.
All portions or specimens of the substance used as money should be hom*ogeneous, that is, of the same quality, so that equal weights have exactly the same value.
The basic truth is that we can do five things with our money: (1) save it; (2) spend it; (3) give it away; (4) pay taxes; and (5) pay down debt. Shake it up any way you want, and chances are it will end up in one of those buckets.
Durable: An item must be able to withstand being used repeatedly. Acceptable: Everyone must be able to use the money for transactions. Uniform: All versions of the same denomination must have the same purchasing power. Limited in Supply: The supply of money in circulation ensures values remain relatively constant.
Durability is the ability of a good to retain its original state overtime. In order to be considered durable, a good must be difficult to damage or alter. Durability is a necessary property of money because the money must be able to sustain its value over time.
Three characteristics that make money or currency valuable are its acceptability, its use as legal tender, and its relative scarcity. The main uses of money are as a medium of exchange, a unit of account, and a store of value.
What Are the Signs of a Healthy Economy? Signs that can indicate a healthy economy include low unemployment, a steady growth of inflation, increases in new home construction, optimism measured by the consumer confidence index, and an increasing gross domestic product (GDP).
The characteristics of wealth are that, it is scarce; it can be utilized, and can be transferred from person to person or from organization to organization. Which of the following is/are characteristic/characteristics of liquids? Which of the following is the characteristics of leguminosae?
The four main functions of money include: acting as a standard of deferred payment, being used as a store of value, acting as a medium of exchange, and being used as a unit of account.
A country's economy affects its money's value, too. The money is worth more at home and abroad if the economy is strong. Things like how much stuff a country makes (GDP), its inflation rate, and its debt can all influence this.
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