Qualities Of Money, The Essentials, What Qualifies To Be Referred As Money

An example and type of money

Many business students globally are familiar or might have come across the issue of Qualities of Money as explained below.

It is not surprising that, many Examining bodies ask this question most often in the Business Management examinations everywhere.

Therefore, we are here to assist you in to fully understand this topic very well.

Moreover, The topic “Money and Banking” is a major business management to studied in colleges.

Thus the topic is a key part of Business Management course outline for Senior High School across the the world, and even in Europe and America.

Now let’s check the many qualities of money as explained below.


Qualities Of Money


  • General Acceptability:

Money must be generally acceptable. Therefore, people must have confidence in, and be ready to accept it as a medium of exchange.

Certainly,  money will loses its general acceptability, if it ceases as a good medium of exchange.


  • Portability:

Money must be portable. To explain that, you should be able to move money from one place to another.

In fact, that is why there is the use of more paper money than coins.


  • Durability:

Money must be last longer for money to perform its function effectively . That means that, it should not wear out quickly or be destroyed within a shorter period.

Indeed, the materials used to make it should be durable.


  • Divisibility:

One should be able to divided into reasonable small units. That will ensure that goods can be bought in both small and large quantities. 

Divisibility facilitates  medium of exchange.


  • Recognisability:

Money should easily be identified without facing problems. This would serve as a check against forgery and counterfeit currency or money.


  • Homogeneous:

Money must be homogenous. A unit in each denomination should be the same as any other unit in the same jurisdiction. 

Example, you took ten dollar note in New York to buy something.  That ten dollars should be the same as ten dollar note in Washington.

All units of some denomination should be perfectly identical in weight, colour, design. etc.


  • Relative Scarcity:

Money must not be too much in an economy in order to maintain its value. This is because, if it is abundant in the economy, it may lose its value.


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