Money : Function & Characteristics
What are the functions of money?
And what are the characteristics of money?
This article on money will answer all the questions raised above.
Let us start off with finding a good definition link money.
Money can be defined as anything that is generally accepted by the people of a society or territory for the payment of goods and services bought or for the payment of debts.
Another very good, but brief definition of money is money characteristics and functions of money generally acceptable as a medium of exchange in a region or defined money characteristics and functions of money />Now that we have learned what money is, let us now take a look at the functions of money.
What are the functions of money?
Money performs a great deal of functions.
This is undoubtedly the most prominent function of money.
Money solves all the problems associated with barter trade or the Barter system.
With Barter trade, goods were directly changed with other goods.
This system came along with a great deal of disadvantages because the only way you could get what you wanted was to have something that you could exchange with someone for what you wanted.
For example, supposing John wanted some onions, and went to Janet who had some.
And since there was no money to pay Janet and read more the onions, he would have to look for something that Janet also needed in order to exchange for the onions.
But money came to solve this problem.
Another function of money is that it is used as a measuring tool for goods and services.
You see, a measuring unit like kilometer is used in measuring distance in order that we can compare the distance from one place to another.
It therefore goes without saying that without the kilometer it would so money and even it very difficult to compare the distance from one place to another.
Money also plays similar role when it comes to evaluating goods and services and comparing them with other goods and services.
Thanks to the money characteristics and functions of money of money, it is no longer difficult to effect, for example the exchange of a sack of beans for a cow.
Today money has made it possible for us to exchange the sack of beans for the appropriate amount of money in a fair manner.
When we say deferred payment, what is meant is the settlement of debt at a later date.
With the presence of money it is very easy to defer payment from now until a later date in future.
For example, when you buy a commodity on credit, you promise to pay the money value of the commodity that you have bought money characteristics and functions of money a later date.
Money please click for source made it possible for us to record debts and pay them at a later date.
Money also makes it possible for contracts to be entered into now and executed at a future date.
In the absence of money it would be very difficult for one to store goods for future use — especially perishable goods such as tomatoes, onions, fruits, vegetables, etc.
For example, a tomato farmer cannot store his tomatoes for future use.
But by selling his produce for money, the farmer can save click for later use.
Having taken a look at the functions of money, let us now turn our attention to the characteristics of money or rather the qualities of good money.
What are the characteristics of money or the qualities of good money?
Money has all money characteristics and functions of money characteristics below.
Money is easily divisible.
Money must be able to be easily divided into smaller units or denominations in order for one to be able to use to carry out even the smallest of transactions.
If you cannot easily break down money into smaller units, then you do not have money.
Money must be portable.
By being portable, money must be able to be easily carried by a person from one place to another.
It should be easy and convenient to be carried around regardless of the distance the one carrying it is going to cover.
Certainly, it must not be too bulky.
Money must be something that is generally accepted by all the people of a particular area, region, country or territory.
In other words, money must be legal tender.
When something is legal tender, then it is supported by the laws of the land.
This means one can use it in payment and settlement of debt within a defined region or place.
It therefore becomes a crime to refuse to accept it.
Money must be scarce but not extremely scarce.
Precious metals like gold and diamond are too scarce and can therefore not pass as money.
Money should not be too scarce but limited in supply.
If money is not scarce and supplied in abundance, then it becomes relatively worthless just like sand or stones, which can be found everywhere.
Bottom line: money must be relatively scarce to get.
Money must enjoy a relative stability over time in terms of its value.
Anything being used as money should have its value being able to enjoy a reasonable stability over long periods of time else people are going to reject it.
And when people begin money characteristics and functions of money it, then it cannot qualify as money.
Any material that is used as money should be very difficult to imitate.
If it is possible to imitate, then dishonest people are lucky code to produce a lot of imitation of it and flood the entire region with it.
Money should have a standardized unit.
This means that the various units of money must be homogeneous.
The above are the major characteristics of money.
In order for something to qualify as good money, then it should have the above qualities.
NOTE: Anything that is generally acceptable as a means of exchange for goods and services bought is money.
The most important requirement here is for that material money to be generally acceptable by all the people of a defined territory.
Regardless of how precious or valuable a material is, if it is not generally acceptable by a people in a particular area, region, country or territory as a means of exchange, then it cannot be used as money.
I participate in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.
As an Amazon Associate I earn from qualifying purchases.
Money : Function & Characteristics
There are number of functions of money that can be seen easily in the business world. But before discussing the functions of money, lets define the money. Money has been defined by different authors in different ways, which is discussed as under:-According to Walker “Money is that what money does”.
What words... super, excellent idea
I apologise, but, in my opinion, you are not right. Write to me in PM, we will discuss.
In it something is also to me it seems it is excellent idea. Completely with you I will agree.
I think, that anything serious.
I consider, that you commit an error. Write to me in PM, we will talk.
I can not take part now in discussion - it is very occupied. I will be free - I will necessarily express the opinion.
I thank for very valuable information. It very much was useful to me.
I am final, I am sorry, but it does not approach me. I will search further.
Bravo, what necessary phrase..., a remarkable idea
You are absolutely right. In it something is also I think, what is it excellent idea.
It is a pity, that now I can not express - I hurry up on job. But I will return - I will necessarily write that I think on this question.
I apologise, but, in my opinion, you are not right. I am assured. Let's discuss it. Write to me in PM, we will communicate.
It certainly is not right
The authoritative answer, funny...
I apologise, but, in my opinion, you commit an error. I can prove it. Write to me in PM.
In it something is. Thanks for the help in this question. I did not know it.
And how in that case to act?
I join. I agree with told all above. We can communicate on this theme. Here or in PM.
The authoritative answer
Bravo, what phrase..., an excellent idea
I apologise, but, in my opinion, you are not right. I am assured. Let's discuss. Write to me in PM, we will communicate.
I think, what is it � a serious error.
It is an amusing phrase