Question

Is stability a characteristic of money? What does it mean?

NO HAND WRITTEN ANSWERS PLEASE

Answer 1

Stability referes to the ability of money being able to maintain its purchasing power. So with rise in interest rates and inflation, the money worth today would not have the same value in some time. Either money grows or falls depending on the economic situation. Let us say you could buy an apple with a dollay. In a year's time, the same dollar may not be sufficient enough to buy that same good. Money can therefore not be considered as a stable unit if there are flucctuations in the value.