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.