Question

Is gold classified as money? What characteristics of money make this true or not true.

Answer 1

Money is anything which can be used for sell and purchase of goods and services and this goods must have some features.

1.

Unit of account; Money is that good which can be measured and used in small unit.

Since it is difficult to measure in small unit and it cannot be used for sell and purchase of small value of goods because it is very expensive.

2.

Medium of exchange; A money can be used for medium of exchange and everyone accepts it. Since gold cannot be used for small value of goods purchase and sell. Therefore gold does not satisfy the characteristics of money.

3.

Store value; Since money can be stored easily because it does not damage and lose its value which is printed on it. Since gold can also be stored but it is risky because it can be stolen, therefore people avoid keep money in the form of gold in large quantity.

4

Standard of deffered payment. Since money can be used for making the deffered payments but gold cannot be a means of deffered payment becuase its value changes daily and everyone is not interested to accept the deffered payment in the form of gold.

Since Gold does not satisfy all characteristics of money, therefore it cannot be said that gold is a money.