Question

What would happen if currency in all countries had fewer denominations

Answer 1

If the currency in all the countries has fewer denominations, it will enable the sellers to set any price level for goods and services.

Further explanation:

Divisibility feature of Money:

Money is divisible, and that makes the transactions based on money feasible. A $20 bill can be exchanged for two $10 bills or four $5 bills. This divisibility feature of money enables the producer to set any price of goods and services. If currency would be indivisible, it will lead to price setting only in the multiples of the value of available denomination.

Impact of fewer denominations:

1. Price Setting: A producer or price setter will not have many options while setting the price of different goods and services in case of a few denominations available of currency. There would be the same prices of a large variety of goods and services due to fewer options available in front of a price.

2. Trade of Goods and Services: Availability of various denominations is important to stabilize and enhance the trade domestically and internationally. If consumers do not have many denominations of currency, they would not be able to purchase any goods and services from sellers.

Learn more:

1. Learn more about Motivation effect from Money

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2. Learn more about Exchange

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3. Learn more about Loan type

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Answer details:

Grade: Senior School

Subject: Economics

Chapter: Money and Banking

Keywords: what, would happen, currency, in all countries, fewer denominations, price of goods and services, price setting, money, trade of goods and services, trade, money and banking, divisibility, divisibility feature of money, denominations, money bill.

Answer 2

I believe the answer is: "People could not charge as many different prices for good

Denominations refers to the face value of our currency. (for example $1 , $ 10 , $ 100). As a country enter industrialisation era, even the smallest denomination matters in determining the profit of companies who mass produce a certain type of goods. Which is why possibility of many denominations is important for trades.