Question

For a commodity to function effectively as money it must be

A) easily standardized, making it easy to ascertain its value.
B) difficult to make change.
C) deteriorate quickly so that its supply does not become too large.
D) hard to carry around.

Answer 1

For a commodity to function effectively as money, it needs to be easily standardized, hard to carry around, durable, and not deteriorate quickly. Making change is not a defining characteristic of money.

Step-by-step explanation:

To function effectively as money, a commodity must have certain characteristics:

1. Easily standardized: This means that the commodity can be easily divided into smaller units and each unit has the same value. For example, if a commodity is easily divisible into smaller units like coins or bills, it becomes easier to ascertain its value.
2. Hard to carry around: Money needs to be portable, which means it should be easy to carry and transport. For example, coins or paper currency can be easily carried in a purse or wallet.
3. Durable: Money should be able to withstand wear and tear over time. For example, coins made of metal or paper currency made of durable materials can last longer.
4. Difficult to make change: This characteristic is not necessary for a commodity to function effectively as money. Making change might be a challenge in some cases, but it is not a defining feature of money.
5. Does not deteriorate quickly: Money should not deteriorate quickly so that its supply does not become too large. For example, if money were to deteriorate quickly, it would lose its value over time.