What are the main characteristics and uses of money.
The main characteristics of money are:
1. Medium of exchange: Money is universally accepted for the exchange of goods and services.
2. Unit of account: Money serves as a standard measure for determining the value of various goods and services.
3. Store of value: Money can be saved or stored for future use, allowing for the preservation of wealth over time.
4. Portability: Money is easily carried and transferred from one person to another, making it convenient for transactions.
5. Durability: Money is designed to be long-lasting, ensuring that it can withstand regular handling and circulation.
6. Divisibility: Money can be divided into smaller units, allowing for precise pricing and flexibility in transactions.
The uses of money include:
1. Facilitating trade: Money eliminates the need for barter and simplifies the exchange of goods and services.
2. Measurement of value: Money provides a common unit of measurement to compare and determine the worth of different goods and services.
3. Medium of payment: Money is used to settle debts and obligations for purchases or services rendered.
4. Store of wealth: Money can be saved or invested to preserve wealth and provide financial security for the future.
5. Medium of deferred payment: Money allows for loans and credit, enabling individuals and businesses to borrow money and repay it later with interest.
6. Standard of deferred payment: Money serves as a standard for determining the value of future payments, such as contractual obligations and debts.