Homogeneity 5. The six essential qualities of ideal money are durability, portability, divisibility, uniformity, limited supply, and acceptability. Gold and silver coins are more durable as compared to paper money. 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. It should not deteriorate rapidly with the passage of time. Any commodity which lacks this quality can not be accorded as money. Everything on earth lacks at least one or several attributes, so theyre disqualified for the job of money that humanity seeks. Portability 3. This is one of the easiest ejections a ref will ever make. This paper analyzes changes in the quality of money and its influence on the purchasing power of money. 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. An ordinary person should be able to judge the correctness of money. When sand and stones were used as money people had less value for money as everyone was … Money must be limited in supply as compare to demand for it. Precious metals possess this quality. As such gold and silver are considered to be excellent money commodities. Portability: Money must be portable. Money has all the characteristics below. General Acceptability 2. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. If its own value is not stable, how can it measure the values of other goods properly? The standard unit of money must be blank into smaller units to accommodate small/large purchases (pennies, nickels, dimes, quarters, etc.) Characteristics of Money What qualities a commodity must have to become used as money 2. 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. Earlier writers seem, however, to have understood the subject almost as well. Money is often in the forms of coins and paper. 13 - What are six qualities of the ideal money? For the paper money, it also means that it must be resistance to wear and tear for a long time. It should not lose its value with the passage of time. Flashcards. 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. 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. Economical: The good money material has economical quality. Key Characteristics of Money. Cognizability 8. The textbook by Abel, Bernanke, and Croushore (2008) does not even discuss the qualities of money at all. Ch. And this implementation has a vital role in the business environment. However, in economics, money is taken in a broader sense. Money can be exchanged for goods, services and labor. Conclusion:- After discussing the essential qualities of a good money material, we find that so far not a single commodity has been … 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. The government's backing to money creates a sense of confidence. Privacy Policy3. 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. 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 … The most important requirement here is for that material (money) to … Portability It is because of this reason, that these metals have been used as money for a considerably long period of time. 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. Money has to be limited in supply yo generate a value for it. 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. If money is not recognizable by the general public then it cannot be called money. Home Depot draws fire after co-founder backs Trump. This lecture contains the functions of money and qualities of good money material. Following are the qualities of good money: General acceptance. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. it can’t easily be faked or copied; Must be generally accepted by a population; Valuable – generally holds value over time Money serves as a store of value, a unit of account and as a medium of exchange. 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. 13 - What are three functions of money? The money system cannot last for a longer period if it is too much costly. Volume 12, Number 4 (2009) Much has been written about the quantity of money and its effects on money’s purchasing power. In order to possess general acceptability, a commodity should have some intrinsic utility independent of its value for monetary purpose. The value of a material, which is used to measure the value of all the other materials, must be stable. Portability 3. If the money used is perishable it will lose its value in few days. There are a lot of characteristics of money, but economic science determines six basic properties. The value of money should not depreciate with the passage of time. Money is a liquid asset used in the settlement of transactions. 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. STUDY. Qualities of Good Money. The main quality of good money is its general acceptability. Five characteristics of money. The main characteristics of money are durability, divisibility, portability, acceptability, limited supply and uniformity. 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. In other words, it must possess high value in small bulk. The value of money should not depreciate with the passage of time. 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. First and foremost, money acts as a medium of exchange that facilitates commercial transactions. 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. General Acceptability: Homogeneity 5. Since the law declares Money as the legal tender, it has an inherent quality of general acceptability. But how do we use the characteristics of money to our advantage for successful business? 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