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Why does money need to be divisible?  

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maruchi023 | Student, Grade 9 | eNotes Newbie

Posted May 20, 2012 at 9:33 PM via web

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Why does money need to be divisible?


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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted May 20, 2012 at 9:46 PM (Answer #1)

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Money needs to be divisible so that it can effectively act as a medium of exchange.  If money is not divisible, it becomes hard to buy small items and it becomes difficult to have precise pricing.

Imagine, for example, if we tried to use cattle as money.  This would be a big problem because there are surely many things that are not worth a whole cow.  If you wanted to buy a movie ticket, for example, what you do?  You couldn't cut off some percentage of the cow and give it to the ticket taker.  If money is going to be useful, it has to be divisible so we can buy small things and so we can have precise prices (imagine trying to distinguish between something that cost $2 and something that cost $2.50 if you were using cattle as money...).

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