Suppose you have a $1 silver eagle United States coin. This coin is made up of 1 ounce of 99.99% pure silver. (The other .01% is zinc to strengthen the coin)

Question

1. Explain how this coin meets each of the 6 characteristics of money.

Answer 1

The six characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability. Let's analyze how the $1 silver eagle United States coin meets each of these characteristics:

1. Durability: The silver eagle coin is made of 99.99% pure silver, which is highly durable and resistant to corrosion and wear. This ensures that the coin can sustain its value over time and remain as a medium of exchange.

2. Portability: Being a coin, the silver eagle is relatively small and lightweight, making it easily transportable. Its compact size allows for convenient carrying and use in day-to-day transactions.

3. Divisibility: The silver eagle coin, valued at $1, can be further divided into fractions without losing its value. It can be exchanged for multiple coins or combined with other forms of currency to achieve smaller denominations, enabling flexible transactions.

4. Uniformity: All silver eagle coins have the same specifications, weight, and purity, ensuring uniformity and consistency in terms of value across different coins. This makes it easier for people to recognize and accept them as a standardized form of money.

5. Limited supply: The silver eagle coin's production is under the control of the United States Mint, which limits its supply. This limited availability helps maintain its value and prevent inflation.

6. Acceptability: The silver eagle coin is recognized and accepted as a form of legal currency in the United States. It can be used to purchase goods and services at numerous establishments nationwide, as well as being tradable in the broader market for silver.

In summary, the $1 silver eagle coin meets all six characteristics of money. It is durable, portable, divisible, uniform, has a limited supply, and is widely accepted as a form of payment, making it a valuable medium of exchange.