Question

Throughout history, all sorts of interesting things have been used as money, including fresh fish and cattle.

Fresh fish is not an effective form of money. What essential characteristic of money does fresh fish lack that most makes it ineffective?
- allocated by the government
- unit of account
- stackablity
- medium of exchange
- store of value

Cattle is not an effective form of money. What essential characteristic of money does cattle lack that most makes it ineffective?
- allocated by the government
- stackability
- store of value
- medium of exchange
- unit of account

Answer 1

Fresh fish lacks store of value

Cattle lacks medium of exchange

Step-by-step explanation:

To be effective, money must be a store of value, a medium of exchange, and a unit of account.

Fresh fish cannot be used as Store of value since the value can not be stored for longer period of time. Freshness is short term and difficult to preserve it for longer period of time.

To be a store of value, money has to maintain its worth over time. Fresh fish rots and therefore loses value over time, making fresh fish an ineffective form of money.

Cattle can be used as unit of account and store of value but it is not successful when it comes to the medium of exchange. One bowl of wheat can be exchanged for one cattle or cattle can not be exchanged in pieces.

Cattle are not effective as money because they are not a good medium of exchange. Cattle are cumbersome to transport. Using cattle as money is associated with much higher transaction costs than using paper money. Note that they also cannot easily be divided, which makes them a poor unit of account.