The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability. The value of money should not depreciate with the passage of time. A commodity fit to be used as money must be such that it can be easily and economically transported from one place to the other. In order for something to qualify as good money, then it should have the above qualities. Good money is that which is durable and long lasting. Therefore, people must have confidence in, and be ready to accept it as a medium of exchange. Top eight qualities of an ideal money material are: 1. 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. Any commodity which lacks this quality can not be accorded as money. Only a few textbook authors (Colander 1995 and Sloman 1994) mention qualities of money while Melotte and Moore (1995) claim that a good money must be divisible, portable, durable, and stable in value. I believe, if you can adopt these qualities, it is possible you perform better in blogging than before. This is one of the easiest ejections a ref will ever make. An important quality of money is its acceptance. 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. . Malleability 7. It means money must be a thing of continued use. Homogeneity 5. 13 - Discuss the various ways in which London... Ch. High Value: The money material should possess high value in small bulk, so that it can be conveniently carried and handled. –Money should be storable without any fall in value. Reason is that when you have more than one person’s success secrets, you have edges over those who don’t. In fact, holding money is a more effective way of storing value than … A thousand rupee note can be changed into the notes of small denominations. 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. Stability of Value! In other words, it must possess high value in small bulk. It is possible only if the various units of money are identical. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. 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). 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. General Acceptability 2. Portability: Money must be portable. As such gold and silver are considered to be excellent money commodities. Good money requires acceptance to all without any hesitation. If money is not recognizable by the general public then it cannot be called money. Because of this feature of money, it makes it pretty easy for many to identify counterfeit currency. It is possible only if it contains huge value in small bulk. This lecture contains the functions of money and qualities of good money material. What is money? Now the notion of money has changed. 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. Paper money possesses this quality. First and foremost, money acts as a medium of exchange that facilitates commercial transactions. Learn. 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 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. Everything on earth lacks at least one or several attributes, so theyre disqualified for the job of money that humanity seeks. Another quality of good money is that it should be capable of making small purchases. For the paper money, it also means that it must be resistance to wear and tear for a long time. Their portions can be melted and remelted together any number of times without much loss. Infographic: The Properties of Money. Durability means that dollar bills or coins are easily replaceable should they become damaged. It should also possess the attribute of impressionability so that it may easily receive the impressions. The most important requirement here is for that material (money) to … Anything, which is acceptable in a certain payment but not generally acceptable, cannot/be regard as good money. General Acceptability: Created by. Write. Silver coins are not equally lasting but wear out fairly slowly. General Acceptability: Money must be generally acceptable. And this implementation has a vital role in the business environment. 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. 1. It should not deteriorate rapidly with the passage of time. Indestructibility or Durability 4. They've found that people who are good with money are generally goal-driven, value-driven, accountable, and efficient. Money must be able to be easily divided into smaller units or denominations in … Humanity doesn’t seek second best as money (example: copper maybe, not rare enough) they always seek what works the … The precious metals, gold and silver by and large, possess the above mentioned qualities of good money material. 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. 4 Comments. NOTE : Anything that is generally acceptable as a means of exchange for goods and services bought is money. In order that a commodity may be used as a measure of value, it is essential that its units are similar in all respects. Paper money is considered good money as it can be shifted easily from one place to another. However, changes in the quality of money have been widely neglected. The money material should be capable of being melted, beaten and given convenient shapes. Money must be limited in supply as compare to demand for it. Since the law declares Money as the legal tender, it … Bartering was one way that people exchanged goods for other goods before money was created. Money serves as a store of value, a unit of account and as a medium of exchange. It is possible only if the various units of money are identical. If its own value is not stable, how can it measure the values of other goods properly? An ordinary person should be able to judge the correctness of money. 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. How money originates Money is a commodity that is mainly used to obtain other goods; It must originate in free-market by the free choice of people; It must be valued and demanded as a good. 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 can’t easily be faked or copied; Must be generally accepted by a population; Valuable – generally holds value over time 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. The main characteristics of money are durability, divisibility, portability, acceptability, limited supply and uniformity. The standard unit of money must be blank into smaller units to accommodate small/large purchases (pennies, nickels, dimes, quarters, etc.) Harris explained these qualities with remarkable clearness in […] Test. The main quality of good money is its general acceptability. Money is homogenous. Cognizability 8. Gold and silver coins are more durable as compared to paper money. General Acceptability 2. 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. Top eight qualities of an ideal money material are: 1. In order to possess general acceptability, a commodity should have some intrinsic utility independent of its value for monetary purpose. It functions based on the general acceptance of its value within a governmental economy and … Divisibility 6. Qualities of Good Money. 13 - What are three functions of money? Privacy Policy3. It is because of this reason, that these metals have been used as money for a considerably long period of time. people can carry it around with them on a daily basis. These are all critical characteristics of money. Gravity. The value of money should not depreciate with the passage of time. Qualities of Good Money. Malleability 7. Food, water, copper, salt, real estate, anything that has value. What is money? Legal qualities of money. Money is anything that is generally acceptable as a medium of exchange, common measure, store of value, … The qualities of good Money, are as under. Portability The money system cannot last for a longer period if it is too much costly. The ideal money commodity should, as such, possess utility, portability, durability, homogeneity, divisibility, malleability, Cognoscibility and stability of value. It should be commonly acceptable for the sale and purchase of goods and services. 13 - What are six qualities of the ideal money? Good money is always scarce. 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. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. If we use diamond as money and by chance it drops from our hand and breaks, we will suffer an enormous loss. 13 - Complete each of the following sentences: A... Ch. When sand and stones were used as money people had less value for money as everyone was … Match. Communicability:- Communicability is an essential quality of good money. Economical: The good money material has economical quality. Terms in this set (5) Divisibility. 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. 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. Explain the characteristics required by money if it is to carry out its functions effectively. Any commodity which lacks this quality can not be accorded as money. it needs to last; Portable i.e. The six characteristics of money are durability, portability, acceptability, limited supply, divisibility and uniformity. 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. The essential quality of good money is that it should be acceptable to all, without any hesitation in the exchange for goods and services. First: Money is a store of value. Money should not be subject to fluctuations in value. The cost of printing currency notes and minting coins must be lower. An important quality of money is its acceptance. Money is easily divisible. This is not the case with precious metals. Characteristics of Money and Inflation & Deflation Characteristics of Money. Earlier writers seem, however, to have understood the subject almost as well. Welcome to EconomicsDiscussion.net! 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. The six essential qualities of ideal money are durability, portability, divisibility, uniformity, limited supply, and acceptability. Money can be exchanged for goods, services and labor. Ch. 13 - Most economists believe that the better fiat money... Ch. 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. In order for something to qualify as money, then it should have the following qualities or features: Divisibility. If the former, it cannot be easily coined; If the latter, it would not last long. If the money used is perishable it will lose its value in few days. Money is a powerful tool if you know how to use it. Portability 3. It is a common myth that traditional economies usually functioned on a system of barter such that goods were directly exchanged. This quality of money makes best use of money possible. Here are some important qualities of good money: General Acceptability. Good money requires acceptance to all without any hesitation. Ch. There are a lot of characteristics of money, but economic science determines six basic properties. 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. In simple terms, money refers to the currency that consists of notes and coins. Portability 3. Volume 12, Number 4 (2009) Much has been written about the quantity of money and its effects on money’s purchasing power. Durability: Money should be durable. Since the law declares Money as the legal tender, it has an inherent quality of general acceptability. Homogeneity 5. Qualities Of Money. This quality of money will encourage savings and investment. An ordinary person should be able to judge the correctness of money. Ch. Before publishing your Articles on this site, please read the following pages: 1. In this article we are going to take a look at some of the major characteristics or features of money. Content Guidelines 2. Cognizability 8. It will cease to be current. An ideal money material should possess the following qualities: It is the very essence of money. 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. This quality of money will encourage savings and investment. 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. What are the characteristics of money or the qualities of good money? The paper money is easier to carry because it has less weight than metallic money. It practically happened in Kuwait during the gulf war, when people refused to accept Kuwaiti Dinars in payments. The government's backing to money creates a sense of confidence. Durability is one of the most important qualities of money. Money is often in the forms of coins and paper. What are the characteristics … In the case of oxen and grain, a small value occupies a large bulk and weight; hence, they are unsuited as money commodity. Disclaimer Copyright, Share Your Knowledge Good money is that whose value is fairly stable. Precious metals possess this quality. Stability of Value! Share Your Word File 5 Qualities of a Blog That Makes Money June 9, 2020 by Kai Magsanoc In April 2020, the International Monetary Fund (IMF) declared that the world economy will go into recession, “the worst since the Great Depression” from 1929 to 1933. The textbook by Abel, Bernanke, and Croushore (2008) does not even discuss the qualities of money at all. Flashcards. PLAY. Conclusion:- After discussing the essential qualities of a good money material, we find that so far not a single commodity has been … STUDY. This paper analyzes changes in the quality of money and its influence on the purchasing power of money. Another quality of Money is it should be store-able and it should not be depreciated with time. 4].Scarcity – The scarcity is the quality of good money material. Good money should have the quality of portability. 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 … Spell. But how do we use the characteristics of money to our advantage for successful business? Fluctuating standard of value is just like a changing yard or kilogram. Paper notes and modern coins of different denominations are identical in size and color; therefore they can be recognized very easily. 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. However, in economics, money is taken in a broader sense. 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. Certainly, money will loses its general acceptability, if it ceases as a good medium of exchange. If people lose confidence in money and refuse to accept it in payments, it will not work as money any further. 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. easy to carry around, convenient, easy to use; Divisible i.e. It is possible only if the money is divisible into small units. it can be broken down into smaller denominations; Hard to counterfeit - i.e. 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. Paper money has this quality of store-ability. Characteristics of Money What qualities a commodity must have to become used as money 2. It should be neither too hard nor too soft. Indestructibility or Durability 4. Following are the qualities of good money: General acceptance. It should have certain distinct marks which nobody can mistake. Communicability is an essential quality of good money. 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. Money has to be limited in supply yo generate a value for it. It enables a person to make small purchases. William E. Beers on April 2, 2012 at 8:05 am Andy. Divisibility 6. PROTECT YOURSELF, and do it NOW! Money has all the characteristics below. Everyone must find it very easy to recognize it and know its value. By it, we mean the capability of a substance for being easily recognised and distinguished from all other substances. Gold and silver are generally acceptable to all without any hesitation because they are used for ornamental and other purposes and can be easily sold as bullion, besides being used for monetary purposes. Key Characteristics of Money. Money acts as a unit of account, a medium of exchange and a store of value. “It must not evaporate like alcohol, nor purely like animal substance, nor decay like wood, nor rust like iron. 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. Five characteristics of money. Money is a medium of exchange; it allows people to obtain what they need to live. kelsey_mccormick83. Home Depot draws fire after co-founder backs Trump. Money is recognizable. It should not lose its value with the passage of time. Share Your PPT File, Changes in Money Supply: it’s Meaning and Determinants. The people accept even fiat money (money issued without keeping any metallic reserves) due to the government support. Durability i.e. The value of a material, which is used to measure the value of all the other materials, must be stable. 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
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