ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Divisibility. Money must be made in various units. You should be able to make change. By having various units of money, goods of various value can be paid for, and change for larger units of money can be made.

Detailed explanation-2: -in fact, a variety of items have been used as money over the centuries. The items that worked the best tended to have four basic characteristics: portability, divisibility, durability, and acceptability.

Detailed explanation-3: -If someone wants to buy a smaller unit of a commodity, then divisibility of money can make it possible. For example, cows cannot function as good money. This is because you cannot divide a cow without making it lose its value.

Detailed explanation-4: -Money serves several functions: a medium of exchange, a unit of account, a store of value, and a standard of deferred payment.

Detailed explanation-5: -Divisibility: Money must be capable of being divided into smaller parts. Divisible forms of money help make transactions of all sizes and amounts possible.