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Unique Properties of Money

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Unique Properties of MoneyIdeal money has to possess some unique properties that make it used as a medium of exchange, unit of account and store of value. This means that it has to be portable, divisible, durable, of uniform quality, relatively stable in its value and has to have a low opportunity cost. Money, as depicted in its history is not always in the form of notes and coins. Money can be defined as an object that is acceptable as payment in exchange for goods and services (Bade amp. Michael, 2002). For example, in the absence of official currency, in prisons, cigarettes served the role of money. Pouches of mackerel acted as money in prisons after cigarettes were banned by the prison authorities Pouches of mackerel were easily transferable from one place to another meaning they were portable. Cans were banned by wardens as a means of exchange, so prisoners turned to plastic pouches of mackerel. These were easily transferable around prison walls. Just like ideal money, the pouches of mackerel, plastic or can, were durable. They could be used for a long period without diminishing in value and quality. The pouches of mackerel cost about $ 1 at the commissary. Rather than, eat them, prisoners preferred to use them as money for trade. This means that their opportunity cost is low just like ideal money. Instead of eating them, prisoners derived a greater satisfaction in using them as a means, to trade for goods and services they needed much more. Their uniform value also made them as the preferred means of exchange in prison where ideal money was not available (McEachern, 2012). Money is characterized by almost non-existent fluctuation in value. The pouches of mackerel acted similarly as their value remained uniform over a length of time. Similar to ideal money, the pouches of mackerel did not wear out quickly, were easy to carry and move around. They could be exchanged easily to support a range of prices and had uniform quality. There were few resources tied in creating the pouches and people were willing to accept them in believe that they would hold their value. ReferencesBade, R. amp. Michael, P. (2002). Foundations of Microeconomics. Boston, MA: Addison-WesleyMcEachern, W.A. (2012). ECON Macro 3 (3rd ed.). Mason, OH: South-Western