Characteristics of Money
As a medium of economic exchange, Money is a commodity accepted by general consent. In which prices and values are expressed, it is the medium. From person to person and from country to country, it circulates; wealth. It is the principal measure. Money is widely accepted as payment. It is a verifiable item or digital entity that has value. The following essential characteristics of Money are:
Medium of exchange: Characteristics of Money
First and foremost, Money facilitates commercial transactions and acts as a medium of exchange. In a barter system, the growth was directly exchanged; it is a common myth that traditional economies usually functioned. Of want an extreme inefficient this requires a coincidence. At that moment, to have something your baker halogens, if you’re you’re going to buy bread, you need. Your baker does not need furniture. If you produce furniture, you are lucky. A universal system of commercial exchange money solves this problem by providing a universal system. Such gold, tea, or tobacco traditional economies commonly used commodity money.
Store of value: Characteristics of Money
For later use, Money can be used to store value. For emergencies, retirement, education, and vacations, individuals may save money in the future to buy an expensive asset.
Of Account unit: Characteristics of Money
The value of assets, income, profits, losses, taxes, interest, and more, the official currencies of nations and regions, are used to account for the measure. For many social, economic, and business processes, events, programs, and risks, it is common to use Money to measure.
Tender: Characteristics of Money
By a government and legal system, the official form of payment recognized legal ender is Money, designed as the official form of revenue recognized. Al financial obligations, the legal tender may be used to settle. In many cases, of the law requirements, this is. For example, in legal tender to labor laws but must offer minimum wage, a banana farmer may be unable to pay workers with bananas.
Money’s characteristics are durability, portability, disability, uniformity, limited Supply, and acceptability. Of Money, let’s compare two examples of possible:
- In history, cattle have been used as Money at different points. A cow.
- To the value of one cow, a stack of bills equal $20.
How do they stack up? Let’s run down our lists of characteristics?
- Durability: Fairly durable a cow is, for the cow, and can severely reduce its value. A long trip to the market runs the risk of sickness or death. If they become, worn twenty-dollar bills are pretty durable and can easily replace. Even better, the bill to market does not threaten the health or value of a long trip.
- Portability: to the store, while the cow is challenging to transport, in my pocket, the currency can be quickly put.
- Divisibility: For other denominations, a 20-dollar bill can be exchanged, say a 10, 4 quarters, a 5, and four 1s. A cow is not very divisible, on the other hand.
- Uniformity: Each cow has a different value cow comes in many sizes and shapes; the form of money cows is not very uniform. All of the same size and shape and value twenty dollar bills are; very consistent.
- Limited Supply: A limited supply of Money must have to maintain its value. It is pretty little while the Supply of cows, As Money if they were used, the Supply of cows increases you can bet ranchers would do their best, their value. The Supply, the deal, and, therefore, its value over time that the Money retains are regulated by the Federal Reserve Money has, and Money in general.
- Acceptability: have intrinsic value. Even though cows have Money, some people may not accept it. In contrast, to assume 20-dollar boils, people are more than willing. To pay your bills, the U.S government protects your right to use U.S currency.
At this point that it seems utterly clear, well – of Money on the characteristics based – of Money than cattle U.S 20-dollars bills are a much better form.
Of Money, what are the four features?
In Four functions, whatever serves society: exchange as a medium, a unit of account, a store of value, and a standard of deferred payments.
