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Elaborate on Monetary Standards

Elaborate on Monetary Standards

Answers

Wilfred
Refers to the characteristics which must be possessed by money in order to carry out its functions. There also called the attributes of good money materials. Many materials in the past have been used as money e.g. cattle/goat skins, copper, gold, silver, cowry shells etc., but with time those materials have lost their usefulness as monetary standards. For a material to be used as a monetary standard it must posses the following characteristics.

1. General acceptability - The material must be acceptable by the public. This general acceptability should not be tied to alternate uses.
2. Portability material should be portable so that one can transport it from one point to another without loss or depreciation.
3. Durability - Material should be capable of storage without depreciation.
4. Homogeneity – Item used should be of the same type and uniform in quality. It should be capable of being standardized.
5. Divisibility – money material should be capable of being divided without loosing value. The sum of the parts should be equal to the undivided whole.
6. Cognoscibility – capable of being recognized and not confused with other materials by touch, hear and see.
7. Stability of value – the money material should be stable in order to ensure stable prices. The money material should not fluctuate with time. It should remain constant in terms of value in order to ensure a stable micro-economic growth.
Wilfykil answered the question on March 8, 2019 at 07:54

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