Question

Historically, money has not always been of uniform quality. for example, diamonds were often used as a form of money, but every diamond is different. what problem occurs when money is not of a uniform quality? people will hoard high-quality money and spend low-quality money. as a result, the money used in transactions will be of inferior quality. people will turn to commodity money if they don't trust paper money. people will rely on barter rather than accept money as payment. unlike pennies and nickels, which cost more to produce than they are worth, paper money and quarters are: a good store of value examples of token money useful as a medium of exchange cattle can be used as money but can also be slaughtered for food. cattle are an example of: commodity money fiat money ideal money

Answer 1

what problem occurs when money is not of a uniform quality?

• People will hoard high-quality money and spend low-quality money. As a result, the money used in transactions will be of inferior quality.

One of Isaac Newton's most popular inventions are the coin edge grooves. Before people would file metal coins to gather gold or silver dust that they would later melt. By adding edge grooves to the coins, that was reduced. Before when people traded with non-uniform coins, good coins were actually more valuable because they were not filed yet. If you had to choose which coins to use, you would always prefer to use the filed coins of inferior quality.

unlike pennies and nickels, which cost more to produce than they are worth, paper money and quarters are:

• examples of token money

Token money is any note (bill) or coin whose value is not related to the material of which they are made of. E.g. a $100 dollar bill is worth much more than a small piece of paper.