Homework Help

Why is it important for money to be both portable and divisible? 

user profile pic

kristenmarieb... | Student, Grade 10 | Valedictorian

Posted July 18, 2013 at 2:21 AM via web

dislike 1 like

Why is it important for money to be both portable and divisible? 

1 Answer | Add Yours

user profile pic

Lori Steinbach | High School Teacher | (Level 1) Distinguished Educator

Posted July 18, 2013 at 2:44 AM (Answer #1)

dislike 0 like

Throughout history, many things have served as money (currency), including shells, animals, grains, and even tea. Eventually most societies settled on silver and/or gold as the foundation for their currencies. Money, as opposed to commodities such as those mentioned above, must be both portable and divisible. 

Money must be portable because it has to be carried with the consumer in order to effect a trade. A pig, for example, is not a feasible form of money (currency) because it is unwieldy. 

Money must also be divisible in order to facilitate many different kinds of transactions. That same pig, for example might work as currency when buying an item which matches the value of the animal; however, if one wanted to purchase, say, a pack of gum, it is impractical to subdivide the pig for such a small item. 

Several other considerations when determining an feasible form of money include relative rarity (in order to maintain the value of the currency), non-consumability (such as water or oil, which are consumed and therefore no longer spendable), and durability (reliability over time).

Join to answer this question

Join a community of thousands of dedicated teachers and students.

Join eNotes