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Monday, 21 November 2011

What are the qualities of good money material

Following are the main qualities of good money material. Any thing which is generally accepted as a medium of exchange it may be coin o paper is money.

1. General Acceptability :-
The essential quality of good money material is that it should be acceptable without any hesitation in exchange for goods and services.

2. Stability Of Value :-
Money should be stable in value. If the value of money fluctuates swiftly then it is unless money. Because money is the standard by which we measures the value of all other commodities.

3. Transportability :-
The commodity chosen as money should be easily transportable without any depreciation.

4. High Value Small Weight :-
A good money value should be high but weight should be small. So it will be easy in sending from one place to another.

5. Store ability :-
A good money material is that which can be store able without any depreciation. If money material is perishable then it can not serve as a good money material.

6. Divisibility :-
The commodity chosen as a money should be capable of being re-united without loosing its value.

7. Homoginity :-
The commodity selected as money should be of a uniform quality and capable of standardization.

8. Cognizability :-
It is the basic condition of perfect money that it should be easily recognizable by the eye, ear or the touch.

9. Malleability :-
A commodity selected to serve as a money should be capable of being moulded and stamped.

10. Economical :-
The money material should be such that unnecessary expenditure may not be wasted on its preparation.

11. Elastic Supply :-
The supply money should be elastic. If demand of money increases its supply may be increased easily.

After discussing the qualities of good money material, we can say that gold and silver are the only metals which satisfy some condition of standard coinage.

Any how we can say that any thing which command confidence of the people and is accepted as a medium of exchange is called money.
In the words of Samuelson "Money is a medium of exchange enabling us to transact our national income and product without resource to hopelessly inefficient barter".

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