It should not lose its value with the passage of time. Good money is always scarce. Qualities of Good Money. Paper notes and modern coins of different denominations are identical in size and color; therefore they can be recognized very easily. The main characteristics of money are durability, divisibility, portability, acceptability, limited supply and uniformity. In order for something to qualify as money, then it should have the following qualities or features: Divisibility. Before publishing your Articles on this site, please read the following pages: 1. General Acceptability 2. Bartering was one way that people exchanged goods for other goods before money was created. Money is homogenous. When sand and stones were used as money people had less value for money as everyone was … Volume 12, Number 4 (2009) Much has been written about the quantity of money and its effects on money’s purchasing power. 13 - What are six qualities of the ideal money? TOS4. Another quality of good money is that it should be capable of making small purchases. Gold and silver coins are more durable as compared to paper money. Scarcity: A good money material must be scarce in quantity or the way to obtain money issued must kept low as compared to the desire for it. If its own value is not stable, how can it measure the values of other goods properly? The qualities of good Money, are as under. Money can be exchanged for goods, services and labor. General Acceptability: It practically happened in Kuwait during the gulf war, when people refused to accept Kuwaiti Dinars in payments. Money has all the characteristics below. it needs to last; Portable i.e. Communicability:- Communicability is an essential quality of good money. The cost of printing currency notes and minting coins must be lower. If the former, it cannot be easily coined; If the latter, it would not last long. Cognizability 8. It is possible only if the money is divisible into small units. The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability. It will cease to be current. This quality of money will encourage savings and investment. But in a modern business environment, you can’t always rely on cash, so you have to look for online ways of transacting with your money. Money has to be limited in supply yo generate a value for it. Therefore, people must have confidence in, and be ready to accept it as a medium of exchange. This quality of money makes best use of money possible. Everyone must find it very easy to recognize it and know its value. Unless a person knows that the money which he accepts in exchange for his goods or services will be taken without any objection by others as well, he will not accept it. Money serves as a store of value, a unit of account and as a medium of exchange. Stability of Value! But how do we use the characteristics of money to our advantage for successful business? Food, water, copper, salt, real estate, anything that has value. Commentdocument.getElementById("comment").setAttribute( "id", "ad57099b9e1279cf3466eba2a3070b31" );document.getElementById("bb9a5a46ca").setAttribute( "id", "comment" ); Save my name, email, and website in this browser for the next time I comment. General Acceptability: Money must be generally acceptable. Durability is one of the most important qualities of money. General Acceptability 2. Created by. Indestructibility or Durability 4. An ordinary person should be able to judge the correctness of money. New York, Pageant Press [1956] (DLC) 56008704 (OCoLC)1154146: Material Type: Document, Internet resource: Document Type: Internet Resource, Computer File: All Authors / Contributors: Arthur Kemp Money is anything that is generally acceptable as a medium of exchange, common measure, store of value, … This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. 13 - Complete each of the following sentences: A... Ch. Money is easily divisible. What are the characteristics … Precious metals possess this quality. The textbook by Abel, Bernanke, and Croushore (2008) does not even discuss the qualities of money at all. Disclaimer Copyright, Share Your Knowledge Gold and silver are at once recognised by their distinctive colour, metallic and heavy weight for small bulk, and, as such, satisfy this condition admirably. Good money requires acceptance to all without any hesitation. The ideal money commodity should, as such, possess utility, portability, durability, homogeneity, divisibility, malleability, Cognoscibility and stability of value. In order for something to qualify as good money, then it should have the above qualities. Characteristics of Money and Inflation & Deflation Characteristics of Money. In order to possess general acceptability, a commodity should have some intrinsic utility independent of its value for monetary purpose. Qualities Of Money. They've found that people who are good with money are generally goal-driven, value-driven, accountable, and efficient. PLAY. This is not the case with precious metals. Characteristics of Money What qualities a commodity must have to become used as money 2. The value of a material, which is used to measure the value of all the other materials, must be stable. It is possible only if the various units of money are identical. 13 - Discuss the various ways in which London... Ch. Any commodity which lacks this quality can not be accorded as money. Privacy Policy3. Indestructibility or Durability 4. it can’t easily be faked or copied; Must be generally accepted by a population; Valuable – generally holds value over time PROTECT YOURSELF, and do it NOW! Paper money possesses this quality. NOTE : Anything that is generally acceptable as a means of exchange for goods and services bought is money. Legal qualities of money. Terms in this set (5) Divisibility. Welcome to EconomicsDiscussion.net! it can be broken down into smaller denominations; Hard to counterfeit - i.e. Content Guidelines 2. Infographic: The Properties of Money. Earlier writers seem, however, to have understood the subject almost as well. Harris explained these qualities with remarkable clearness in […] STUDY. The six characteristics of money are durability, portability, acceptability, limited supply, divisibility and uniformity. Money should not be subject to fluctuations in value. Scarcity: A good money material must be scarce in quantity or the way to obtain money issued must kept low as compared to the desire for it. A paper can last only for few months if it remains in circulation and a coin can work §s a medium of exchange for many years. This paper analyzes changes in the quality of money and its influence on the purchasing power of money. Match. If we use diamond as money and by chance it drops from our hand and breaks, we will suffer an enormous loss. Cognizability 8. The money system cannot last for a longer period if it is too much costly. Durability - Durability of money is such that it can be used over and over again; hence it must survive wear and tear for long periods. It is because of this reason, that these metals have been used as money for a considerably long period of time. Here are some important qualities of good money: General Acceptability. It is a common myth that traditional economies usually functioned on a system of barter such that goods were directly exchanged. 13 - What are three functions of money? 13 - Most economists believe that the better fiat money... Ch. Share Your PDF File One of the qualities of a good money material is that it can be stored for a longer period of time without loosing value to meet the future needs. Explain the characteristics required by money if it is to carry out its functions effectively. If too much of money is available people will not create a value for money as everyone holds money in hand. If I work today and earn 25 dollars, I can hold on to the money before I spend it because it will hold its value until tomorrow, next week, or even next year. Durability means that dollar bills or coins are easily replaceable should they become damaged. William E. Beers on April 2, 2012 at 8:05 am Andy. The value of money should not depreciate with the passage of time. The most important requirement here is for that material (money) to … Good money should have the quality of portability. The government's backing to money creates a sense of confidence. Gold and silver are of the same quality throughout; their various parts are similar in chemical and physical composition and their consistency is the same throughout the mass. So, here is how to become a successful blogger and make money in Nigeria or any other part of the world: Be a better blogger Following are the qualities of good money: General acceptance. What are the characteristics of money or the qualities of good money? Divisibility 6. Another quality of Money is it should be store-able and it should not be depreciated with time. Money acts as a unit of account, a medium of exchange and a store of value. It is possible only if it contains huge value in small bulk. It functions based on the general acceptance of its value within a governmental economy and … First and foremost, money acts as a medium of exchange that facilitates commercial transactions. Share Your PPT File, Changes in Money Supply: it’s Meaning and Determinants. If money is not recognizable by the general public then it cannot be called money. Portability: Money must be portable. Key Characteristics of Money. However, changes in the quality of money have been widely neglected. Communicability is an essential quality of good money. The standard unit of money must be blank into smaller units to accommodate small/large purchases (pennies, nickels, dimes, quarters, etc.) I believe, if you can adopt these qualities, it is possible you perform better in blogging than before. ONLY PHYSICAL gold and silver are money, and shortly ALL seven billion of the world’s citizens will be painfully aware of this historical FACT. Qualities of the Material of Money Chapter V Many recent writers, such as Huskisson, MacCulloch, James Mill, Garnier, Chevalier, and Walras, have satisfactorily described the qualities which should be possessed by the material of money. The paper money is easier to carry because it has less weight than metallic money. Since the law declares Money as the legal tender, it has an inherent quality of general acceptability. Money is a powerful tool if you know how to use it. Share Your Word File If people lose confidence in money and refuse to accept it in payments, it will not work as money any further. As money is passed from hand to hand and is kept in reserve, it must not easily deteriorate, either in itself or as a result of wear and tear. Money is primarily a current medium exchange, for a person to buy goods and services from other person in the form of coins and banknotes (Freeman, 2012). In fact, holding money is a more effective way of storing value than … –Money should be storable without any fall in value. An important quality of money is its acceptance. Paper money is considered good money as it can be shifted easily from one place to another. The money material should be capable of division; and the aggregate value of the mass after division should be almost exactly the same as before. An ideal money material should possess the following qualities: It is the very essence of money. Money is a liquid asset used in the settlement of transactions. Fluctuating standard of value is just like a changing yard or kilogram. The Essential Qualities of Money The Essential Qualities of Money MORGAN, E. V. 1969-09-01 00:00:00 Because money is generally accepted as a means of payment, the holder of money can acquire any good or any other financial assets by means of a single transaction ; he can simply buy what he wants, whereas the holder of any other asset must convert it into the means of payment before he can buy. Money is often in the forms of coins and paper. Everything on earth lacks at least one or several attributes, so theyre disqualified for the job of money that humanity seeks. 4].Scarcity – The scarcity is the quality of good money material. Certainly, money will loses its general acceptability, if it ceases as a good medium of exchange. Malleability 7. What is money? Following are the qualities of good money: General acceptance The essential quality of good money is that it should be acceptable to all, without any hesitation in the exchange for goods and services. “It must not evaporate like alcohol, nor purely like animal substance, nor decay like wood, nor rust like iron. An ideal money material should possess the following qualities: 1. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. Spell. Ch. All portions or specimens of the substance used as money should be homogeneous, that is, of the same quality, so that equal weights have exactly the same value. kelsey_mccormick83. The six essential qualities of ideal money are durability, portability, divisibility, uniformity, limited supply, and acceptability. Good money requires acceptance to all without any hesitation. The value of money should not depreciate with the passage of time. Money must be able to be easily divided into smaller units or denominations in … While a deeper look at money did raise many questions, there are at least some foundational truths that can be discerned about money.. For example, many economists and experts in the field agree that money must be a medium of exchange, a unit of account, and a store … Write. Ch. What is money? When money is divisible into small units, the consumer will get maximum satisfaction with his limited income by equating the marginal utility of all the purchased commodities. Ch. Properties/Qualities/Merits of Good Money: The commodity which is to serve as money should have following properties or qualities: (1) General Acceptability: The most important property of money is this that it should be generally acceptable. Characteristics Of Money is very important subject for any business students.Any type of money may be considered as good money due to certain qualities. Money must be limited in supply as compare to demand for it. Good money is that which is durable and long lasting. One of the qualities of a good money material is that it can be stored for a longer period of time without loosing value to meet the future needs. It should also possess the attribute of impressionability so that it may easily receive the impressions. 4 Comments. It should be neither too hard nor too soft. easy to carry around, convenient, easy to use; Divisible i.e. The precious metals, gold and silver by and large, possess the above mentioned qualities of good money material. And this implementation has a vital role in the business environment. The people accept even fiat money (money issued without keeping any metallic reserves) due to the government support. The money material should be capable of being melted, beaten and given convenient shapes. After deputies kill Black man, Vancouver, Wash., erupts In simple terms, money refers to the currency that consists of notes and coins. It means money must be a thing of continued use. Home Depot draws fire after co-founder backs Trump. High Value: The money material should possess high value in small bulk, so that it can be conveniently carried and handled. Their portions can be melted and remelted together any number of times without much loss. Top eight qualities of an ideal money material are: 1. Frequent changes in the value of money will inject the element of instability in economy and people lose confidence in it.Moreover, money is a standard for measuring the values of other goods and services. This is one of the easiest ejections a ref will ever make. The main quality of good money is its general acceptability. In the case of oxen and grain, a small value occupies a large bulk and weight; hence, they are unsuited as money commodity. First: Money is a store of value. 1. Anything, which is acceptable in a certain payment but not generally acceptable, cannot/be regard as good money. This lecture contains the functions of money and qualities of good money material. Flashcards. Reason is that when you have more than one person’s success secrets, you have edges over those who don’t. Portability 3. In this article we are going to take a look at some of the major characteristics or features of money. people can carry it around with them on a daily basis. Destructible articles, such as eggs, dried cod fish, cattle or oil has certainly been used as currency; but what is treated as money one day must not soon afterwards be eaten up.” Gold coins are very lasting; they take about 8,000 years to wear out completely. In order that a commodity may be used as a measure of value, it is essential that its units are similar in all respects. Money can be defined as anything that is used and accepted by the general public as a medium of exchange and for the payment of goods and services. Portability This quality of money will encourage savings and investment. Silver coins are not equally lasting but wear out fairly slowly. Qualities of Good Money. It should have certain distinct marks which nobody can mistake. It should not deteriorate rapidly with the passage of time. It is possible only if the various units of money are identical. Five characteristics of money. This also allows for the ease of transaction. An important quality of money is its acceptance. As a medium of exchange, money has to be continually handed about; and it will cause great inconvenience if every person receiving it has to scrutinise, weigh and test it. Top eight qualities of an ideal money material are: 1. Malleability 7. Portability 3. However, in economics, money is taken in a broader sense. If the money used is perishable it will lose its value in few days. Properties/Qualities/Merits of Good Money: The commodity which is to serve as money should have following properties or qualities: (1) General Acceptability: The most important property of money is this that it should be generally acceptable. These are all critical characteristics of money. As such gold and silver are considered to be excellent money commodities. It enables a person to make small purchases. Gravity. ITunes is one of the greatest benefits obtained when…, Money Market: Definition, Function, Characteristics,…, Text of the Exemplum (Definition, Characteristics,…, 6 Stages of History And Evolution of Money. Test. Durability: Money should be durable. For the paper money, it also means that it must be resistance to wear and tear for a long time. Paper money has this quality of store-ability. By it, we mean the capability of a substance for being easily recognised and distinguished from all other substances. Any commodity which lacks this quality can not be accorded as money. Humanity doesn’t seek second best as money (example: copper maybe, not rare enough) they always seek what works the …
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