Question

Give reason or explain. 

Any commodity cannot act as money. 

Answer 1

Any commodity can’t act as money. For something 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. 
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 divisibility quality as it 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. Cognizbility: By cognizibility, we mean that good money is the one which is easily recognisable by all the members of the society and so no special efforts are required to recognise it.
v. Portability: It should be easy to carry from one place to other without any expenses and inconvenience.
vi. Homogeneity: Money of the same denomination should be homogenous in size and quality. For example, all 5 rupees coin should be of the same size, colour etc.
vii. Stability of value: Anything which is used as money should be stable in the sense that its value of money should not change frequently.