Question : Which of the following is a characteristic of a good currency?

 

Option 1: Durability
 

 

Option 2: Scarcity
 

Option 3: Uniformity

 

Option 4: All of the above

Correct Answer: All of the above

Solution : The correct answer is (d) All of the above

A good currency possesses the following characteristics:

a). Durability: A currency should be able to withstand wear and tear during circulation. It should be made of materials that can withstand frequent handling and usage without deteriorating quickly. Durability ensures that the currency remains usable for an extended period.

b). Scarcity: A good currency should be relatively scarce to maintain its value. If a currency is too abundant or easily replicable, it can lead to inflation and a loss of purchasing power. Limited supply helps maintain the value and stability of the currency.

c). Uniformity: Uniformity refers to the standardization of currency in terms of its design, size, and appearance. A good currency should have consistent features, making it easily recognizable and difficult to counterfeit. Uniformity enhances trust and acceptance of the currency.

These characteristics contribute to the functionality, acceptance, and stability of a currency. They help ensure that the currency serves as an effective medium of exchange, a unit of account, and a store of value. Governments and central banks strive to maintain these characteristics in their currencies to promote economic stability and facilitate efficient transactions.