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What are the five characteristics that make an asset suitable to be used as a medium...

What are the five characteristics that make an asset suitable to be used as a medium of exchange?

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Answer #1

Following are the five characteristics of an asset that make it suitable to be used as a medium of exchange:

1. The asset must be acceptable to (that is, usable by) most people.

2. It should be of standardized quality so that any two units are identical.

3. It should be durable and portable, so that value is not lost by spoilage.

4. It should be valuable relative to its weight so that amounts large enough to be useful in trade can be easily transported.

5. It should be homogeneous or uniform. The medium of exchange should be divisible because different goods are valued differently.

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