Posted by Chester Morton / Friday 13 January 2017 / No comments
The features of money
Definition of money
Money can be defined as “any commodity which is generally
acceptable in exchange for goods and services”. It has three dimensional
meanings. The first is that it is a medium of exchange. The second is that it
is a unit of account and the third is that it is a store of value. For the
ordinary man in the street, because he uses money only for the exchange of
goods and services he sees money only as a medium of exchange.
SOME OF THE FEATURES OF
MONEY
Acceptable across board
One of the characteristics of money is that it must be
accepted by most people in exchange for goods and services. This can only
happen when people are confident that it is what it is being called, money. In
other words, if one takes money of any kind to pay for goods and service, the
person who is being paid must have the confidence in the money that is being
used to pay him.
It must be portable
Another feature of money is that it must be portable.
Portability only refers to the ability to easily carry the money from one
location to another. Normally, money is expected to be light weight. Imagine
the weight of a money bill. Carrying that money should not burden the carrier.
It must be divisible
Another feature is that money must be easy to divide. In
other words, it must be divisible into smaller amounts or units. For example,
one, two, five, ten, twenty and fifty cedis in Ghana, in addition to the coins
which are in five, ten, twenty and fifty pesewas. We also have different
denominations of the Naira or dollar. This way, it should be easy to buy things
in whatever quantum or number one decides to.
Money must be durable
Another feature of money is that it must be durable.
Durability refers to the fact that the money must last for as long as is necessary.
In fact, it must outlast by far, the amount of money that was spent in printing
or minting it. The modern paper money is made with such special materials as to
make it not only very light but also to last very long.
It must look the same
Another feature is that money must be the same, not similar.
It must be the exact replica of any money of the same denomination, in terms of
size, weight and look. In fact, symmetrically similar so that one particular
denomination of money must be the same as the other.
It must be easy to identify
Another feature of money is that it must be easy to identify
by everybody. Everybody who looks at a $100 dollar bill must be certain that
this is a genuine $100 dollar bill.
SAMPLE QUESTIONS
1. a. What is money?
b. Highlight five
characteristics of money.
