The coins and paper used as money are called Currency. Money must be durable, portable, divisible, uniform, limited in supply, and acceptable. Money is something that people use every day. We earn it and spend it but don’t often think much about it. Economists define Money as any good that is widely accepted as a medium of exchange for goods and services. It includes currency and Demand Deposits.

We want money to be durable so it will be able to last a long time. If money was gone too fast or were easily destroyed, it would not serve well as a “Store of Value.” When currency does wear out, new bills and coins replace the old ones.

People need to be able to take money with them to do business. From where they get the money to where they spend it. Modern currency is small enough and lightweight, easy to carry. Electronic money (debit cards, plus online banking and transactions) are even easier.

Divisible means “able to be divided.” Many things cost a part of the unit of measurement, so you need to divide prices. Not everything costs an even amount, so when you buy something you often need to worry about having exact change. Setting prices and making change are easy because of divisibility.

Divisibility: This relates to money being easily divided into smaller denominations for transactional purposes. People will only need as much money as is necessary for their purchases, therefore it is necessary for money to be easily broken down for different types of transactions.

Money is uniform; one ten dollar bill is just as valuable as another. All money is made very carefully to make sure that bills and coins of the same amount are uniform in size and weight If money was not uniform, it might not be accepted. Counterfeits would be easy to create. We would not have a national use currency. Uniformity allows us all to use, and accept as payment, the same kind or type of money.

Uniformity: Depending on the different types of currency that are available, money within that specific currency must look the same. This also allows for money to be accepted, counted and measured accurately.

In order to maintain its value, money must have a limited supply. If the supply of money was too high then the money would lose value (inflation). Money has value because it is limited, especially our Fiat Money, and too much would ruin that trust. The supply, and therefore the value, of 20-dollar bills—and money in general—are regulated by the Federal Reserve so that the money retains its value over time.

It is important that everyone in an economy accepts money in exchange for goods and services. Acceptable means “recognized as having value.” You can use your money at a store because the store owner can spend it elsewhere to buy something he or she needs or wants. If the store did not accept it, what use would your money be?

Acceptability: In terms of a form of currency being accepted within society, money must be accepted by everyone in the economy. This acceptance is for the purpose of the exchange of money for goods and different types of services.

Why does money have to be durable? Why is it important that money is portable? What characteristic allows us to make change? Why must money be uniform? What would happen if money wasn’t limited? What’s the point of acceptability? What do economists define money as?