Question

State with reason whether you agree or disagree with the following statement.

Anything can function as money. 

Answer 1

No. we disagree. Anything cannot function as money. For a thing to be used as money it must possess the following qualities:

i. General acceptability: Good money is the one which is readily accepted by all without any reluctance.  This quality is possessed by gold and silver.
ii. Divisibility: Any commodity acts as good money if it can be divided into small units. For example, currency notes, gold, silver and coins possess the quality of divisibility as they can be divided into different denominations.
iii. Durability: It should possess the quality of durability. That is, it should be long lasting. As currency coins are made up of metal, these are more durable compared to currency notes.  
iv. Cognizibility: By cognizibility, we mean that good money is the one which is easily recognisable by all the members of the society and so special efforts are not required to recognise it.
v. Portability: It should be easy to carry from one place to other without any difficulty, expenses or inconvenience.
vi. Homogeneity: Money of the same denomination should be homogenous in size and quality. For example, all Rs. 5 coins should be of the same size, colour etc.
vii. Stability of value: Anything which is used as money should be stable. In the sense, value of money should not change frequently.