Answered: What is Money? What makes it useful?…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

What is Money? What makes it useful? Explain its primary and derivative functions of Money? explain elaborately?

Expert Solution

Step 1

Answer:

Money: Money is anything that is generally accepted as a medium of exchange, a measure of value, a store of value, and means for the standard of deferred payment.

The characteristics that make money useful are given as:

Scarcity: anything that has been used in past was generally scarce in nature. Scarcity makes something valuable.
Generally acceptable: money is a legal tender. It means it is backed by the government thus it is generally accepted by people.
Portable: money should be portable so that people can carry it with them if they are going to buy something or for various purposes.
Durable: money is durable in nature. It means its value does not decrease or depreciate with time. Though in the case of paper money the money is depreciable.
Divisible: money is divisible. It means it can be used in smaller units as well.

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions