But how do we use the characteristics of money to our advantage for successful business? If too much of money is available people will not create a value for money as everyone holds money in hand. In order to possess general acceptability, a commodity should have some intrinsic utility independent of its value for monetary purpose. Created by. In this article we are going to take a look at some of the major characteristics or features of money. If people lose confidence in money and refuse to accept it in payments, it will not work as money any further. Cognizability 8. Test. Divisibility 6. Harris explained these qualities with remarkable clearness in […] Durability i.e. If the money used is perishable it will lose its value in few days. In the case of oxen and grain, a small value occupies a large bulk and weight; hence, they are unsuited as money commodity. 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. Good money is that which is durable and long lasting. These are all critical characteristics of money. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. If the former, it cannot be easily coined; If the latter, it would not last long. However, in economics, money is taken in a broader sense. Indestructibility or Durability 4. 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). Money serves as a store of value, a unit of account and as a medium of exchange. 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. Money is homogenous. Money can be exchanged for goods, services and labor. Portability: Money must be portable. Spell. Another quality of good money is that it should be capable of making small purchases. It functions based on the general acceptance of its value within a governmental economy and … Paper notes and modern coins of different denominations are identical in size and color; therefore they can be recognized very easily. The textbook by Abel, Bernanke, and Croushore (2008) does not even discuss the qualities of money at all. 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. By it, we mean the capability of a substance for being easily recognised and distinguished from all other substances. . First: Money is a store of value. The most important requirement here is for that material (money) to … 4].Scarcity – The scarcity is the quality of good money material. Any commodity which lacks this quality can not be accorded as money. This quality of money will encourage savings and investment. They've found that people who are good with money are generally goal-driven, value-driven, accountable, and efficient. 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. Five characteristics of money. it can’t easily be faked or copied; Must be generally accepted by a population; Valuable – generally holds value over time The money material should be capable of being melted, beaten and given convenient shapes. The ideal money commodity should, as such, possess utility, portability, durability, homogeneity, divisibility, malleability, Cognoscibility and stability of value. As such gold and silver are considered to be excellent money commodities. If its own value is not stable, how can it measure the values of other goods properly? The value of money should not depreciate with the passage of time. 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 … NOTE : Anything that is generally acceptable as a means of exchange for goods and services bought is money. Since the law declares Money as the legal tender, it has an inherent quality of general acceptability. The standard unit of money must be blank into smaller units to accommodate small/large purchases (pennies, nickels, dimes, quarters, etc.) Money is a liquid asset used in the settlement of transactions. Malleability 7. Money should not be subject to fluctuations in value. Their portions can be melted and remelted together any number of times without much loss. Money is a powerful tool if you know how to use it. The precious metals, gold and silver by and large, possess the above mentioned qualities of good money material. Everyone must find it very easy to recognize it and know its value. Ch. 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. it can be broken down into smaller denominations; Hard to counterfeit - i.e. Top eight qualities of an ideal money material are: 1. Match. 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. It will cease to be current. Qualities of Good Money. Food, water, copper, salt, real estate, anything that has value. This quality of money makes best use of money possible. And this implementation has a vital role in the business environment. Fluctuating standard of value is just like a changing yard or kilogram. kelsey_mccormick83. Divisibility 6. Communicability:- Communicability is an essential quality of good money. 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. Portability Before publishing your Articles on this site, please read the following pages: 1. This also allows for the ease of transaction. Key Characteristics 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. In other words, it must possess high value in small bulk. After deputies kill Black man, Vancouver, Wash., erupts Any commodity which lacks this quality can not be accorded as money. Silver coins are not equally lasting but wear out fairly slowly. The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability. Paper money has this quality of store-ability. An important quality of money is its acceptance. Share Your Word File
Humanity doesn’t seek second best as money (example: copper maybe, not rare enough) they always seek what works the … It is possible only if the money is divisible into small units. Characteristics of Money What qualities a commodity must have to become used as money 2. Welcome to EconomicsDiscussion.net! Stability of Value! Money is a medium of exchange; it allows people to obtain what they need to live. I believe, if you can adopt these qualities, it is possible you perform better in blogging than before. 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. 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. An ordinary person should be able to judge the correctness of money. The essential quality of good money is that it should be acceptable to all, without any hesitation in the exchange for goods and services. 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 value of money should not depreciate with the passage of time. Paper money is considered good money as it can be shifted easily from one place to another. Portability 3. First and foremost, money acts as a medium of exchange that facilitates commercial transactions. 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. Money is often in the forms of coins and paper. 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. The people accept even fiat money (money issued without keeping any metallic reserves) due to the government support. Good money is always scarce. An important quality of money is its acceptance. The money system cannot last for a longer period if it is too much costly. Since the law declares Money as the legal tender, it … Infographic: The Properties of Money. Learn. For the paper money, it also means that it must be resistance to wear and tear for a long time. 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. 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 qualities of good Money, are as under. Everything on earth lacks at least one or several attributes, so theyre disqualified for the job of money that humanity seeks. 13 - Discuss the various ways in which London... Ch. A thousand rupee note can be changed into the notes of small denominations. Ch. Share Your PPT File, Changes in Money Supply: it’s Meaning and Determinants. William E. Beers on April 2, 2012 at 8:05 am Andy. 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. Legal qualities of money. Bartering was one way that people exchanged goods for other goods before money was created. PLAY. The cost of printing currency notes and minting coins must be lower. Precious metals possess this quality. Money must be able to be easily divided into smaller units or denominations in … Money is anything that is generally acceptable as a medium of exchange, common measure, store of value, … Money has all the characteristics below. General Acceptability 2. 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.