What identify and explain the three main characteristics and uses of money quizlet?
Identify and explain the three functions or uses of money. MEDIUM OF EXCHANGE-is anything that is used to determine value during the exchange of goods and service.
To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange.
- Durability.
- Portability.
- Divisibility.
- Uniformity.
- Limited Supply.
- Acceptability.
Money has three functions: as a store of value, as a unite of account and as a medium of exchange.
Money functions as a medium of exchange, allowing individuals to trade goods and services with one another. It also serves as a store of value, allowing people to save wealth over time. Lastly, it functions as a unit of value, enabling people to compare the worth of different items.
In order for money to function well as a medium of exchange, store of value, or unit of account, it must possess six characteristics: divisi- ble, portable, acceptable, scarce, durable, and stable in value.
Economists differentiate among three different types of money: commodity money, fiat money, and bank money. Commodity money is a good whose value serves as the value of money. Gold coins are an example of commodity money. In most countries, commodity money has been replaced with fiat money.
portability, durability, divisibility.
What are the six characteristics of money? durability, portability, divisibility, uniformity, limited supply, and acceptability.
- You can sell something, such as labor, and store the purchasing power that results from the sale in the form of money for later use. Money must be able to withstand the wear and tear of being passed from person to person. Paper money lasts one year on average; coins last for many years. Easy to carry.
What is the main use of money?
It is used as a medium of exchange between individuals and entities. It's also a store of value and a unit of account that can measure the value of other goods. Prior to the invention of money, most economies relied on bartering, where individuals would trade the goods they had directly for those that they needed.
The four main functions of money include: acting as a standard of deferred payment, being used as a store of value, acting as a medium of exchange, and being used as a unit of account.
In general, there are four main characteristics that money should fulfill: durability, divisibility, transportability, and inability to counterfeit.
Money is any object that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally, a standard of deferred payment.
Two crucial fractional reserve banking system characteristics include creating money through lending and banks' vulnerability to panic. Although money creation is possible in a fractional reserve banking system, it is limited to three main factors: the amount of cash in deposits, reserve ratio, and default risk.
Money serves several functions: a medium of exchange, a unit of account, a store of value, and a standard of deferred payment.
Expert-Verified Answer
The correct answer is B) Lack of divisibility.
Uniformity. Every bill and coin of the same value needs to look the same. Money must be uniform in that one $20.00 bill and another $20.00 bill must be able to buy the same thing. Acceptable.
- Durability. Must withstand physical wear and tear that is a part of being used over and over again. ...
- Portability. People need to be able to take money with them from place to place. ...
- Divisibility. Money must be easily divided into smaller denominations. ...
- Uniformity. ...
- Limited Supply. ...
- Acceptability.
Stability. Of all the qualities of good money, stability is probably the most essential one. The value of money cannot change for a long period of time and hence remain stable. If the value of money keeps changing, then it will fail to function as a measure of value and as a standard of deferred payment.
Which of the following is a characteristic of a money market?
Money market investments are characterized by safety and liquidity, with money market fund shares targeted at $1. Money market accounts offer higher interest rates than a normal savings account, but there are higher account minimums and limits on withdrawals.
- Divisibility. The standard unit of money must be blank into smaller units to accommodate small/large purchases (pennies, nickels, dimes, quarters, etc.)
- Portability. Money must be small enough to be carried. ...
- Stability. ...
- Durability. ...
- Difficulty of Counterfeiting.
What are the three basic functions of money? Money as a medium of exchange, money as a unit of account, money as a store of value.
Answer and Explanation: Modern money has essential characteristics of money. They include uniformity, acceptability, divisibility, durability, and portability. Modern money, mainly cashless or nonphysical, bears similar characteristics to cash.
medium of exchange, unit of account, store of value, and standard of deferred value. the Federal Reserve. The most important function of money is its role as: medium of exchange.
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