Question

Explain, with reason,whether you Agree or Disagree with the following statement :

General acceptability is the only quality of good money.

Answer 1

No, I do not agree with this statement.

Reason: Apart from general acceptability good money has many other qualities. Other qualities of good money are explained as follows:

Qualities of Good Money :

Any commodity cannot act as money. A thing which works as money must possess some qualities or characteristics. Following are the qualities of money.

1)      General acceptability - The thing which acts as money must be easily accepted by all without hesitation for exchange.

2)      Divisibility - It should be divisible into different denominations, e.g., 5 rupees, 10 rupees, 50 rupees, etc.

3)      Durability - It should be durable. It should last for a longer period of time e.g. metallic coins are more durable than paper notes.

4)      Cognizibility - It must be easily recognizable and distinguishable from other things.

5)      Portability - It must be easy to carry from one place to another without any difficulty, expense and inconvenience e.g. paper notes are easily portable. They also possess high value in a small bulk e.g. notes of Rs. 500, Rs. 1000.

6)      Homogeneity - The money of same denomination should be of the same size, quality etc.

7)      Stability of Value - It must have general stability of value.