Describe the qualities of a Good Money Material.

      

Describe the qualities of a Good Money Material.

  

Answers


sharon
1.General acceptability:
A good money material must be generally acceptable. People should not hesitate to exchange their goods for the material. Precious metals like gold and silver are always acceptable.
2.Portability:
A satisfactory money material must be of high value for its bulk. Since it has to be moved about from place to place, it must be possible for us to carry it from one place to another without difficulty, expense, or inconvenience. Precious metals such as gold and silver are satisfactory in this regard. Even paper money is ideal in this regard. Iron, for instance, would not be satisfactory in this respect.
3.Cognizability:
The material used as money should be easily recognizable. Gold and silver, for example, can be easily recognized by their color and heavy weight for small bulk.
4.Durability:
The material used as money should not deteriorate. The early forms of money such as corn, fish, and skin were unsuitable in this regard. Gold coins will last many hundreds of years.
5.Divisibility:
The material must be capable of division without difficulty and without loss of value on account of division. Metals have this advantage.
6.Homogeneity:
All coins of the material should be of the same quality. One coin should not be superior to another.
7.Malleability:
A material must be capable of being moulded without much difficulty. Even if a material is divided into a number of pieces, they must be capable of being reunited without loss. Gold is excellent for such purposes.
8.Stability of value:
This is another important quality of a good money material. Commodities, which are subject to violent changes in supply and demand, are unfit for money. For, the value of money, like any other thing, is determined by its supply and demand. If there are violent changes in its supply and demand, its value is not likely to be stable. Since money is used as a store of value and standard of deferred payments, it cannot perform these two functions well, if there is no stability of value for money. If money goes on losing its stability of value, it will not be accepted as money.

sharon kalunda answered the question on March 6, 2019 at 11:21


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