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CHAPTER 5 : MONEY SUPPLY AND FEDERAL RESERVE SYSTEM, Characteristic of…
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Characteristic of money
:check: SCARITY
a medium of exchange should be scare or limited in supply, but not too scare. If it is easy to obtain, then it wont acceptable to be exchange with goods and services
:check: STABLE IN VALUE
its volume must be easily regulated because too much supply of money will reduce it's value. The fall in value of money will deteriorate people's confidence to hold the money
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:check: DURABLE
the itam that serves as money must last long and does not deteriorate or decayed easily, otherwise their sizes and quality will differ and so does its value
Classification of money
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:!: LEGAL MONEY
paper money that the government has approved to be accepted as a means of payment and as a means of setting debt
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Function of money
:pen: STORE OF VALUE
as a store for wealth, a way to save future spending
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