Essential Features of Money

Essential Features of Money - (that is,asmoney)(a...

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Essential Features of Money A substance is more likely to be widely acceptable as a medium of exchange (that  is, as money) if it possesses the following attributes: (a) Portability  Large sums must be easily transportable. Thus some commodities, such as  iron bars, might be acceptable as a medium of exchange but they are hardly  convenient for day-to-day transactions. (b) Divisibility  Notes and coin fulfil this criterion very well, since in the UK there is a unit as  small as 1 penny. Gold bars, being of high value and not easily divisible, fail  on this count. (c) Durability  Any 'money' must maintain its physical characteristics. For instance, although  chocolate bars were used as money in Europe in the 1940s they would not  have been acceptable in a country with a tropical climate. Indeed, except as a  short-term   measure,   they   are   hardly   attractive   when   more   suitable 
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This note was uploaded on 04/10/2012 for the course ECON 101 taught by Professor Gonalez during the Spring '12 term at Université de Bourgogne.

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