What is currency?

Answer 1

Currency is a word that is used in economic circles to refer to some form of money. One popular currency is the dollar. The dollar is the currency of the United States of America. Money can either be physical paper and coin money or money that is deposited in banks. This money is available for transfer, either electronically or with the usage of paper checks. Currency and deposited money are both valid ways to pay for things.

Currency has historically been the primary form of money. It used to be the case that coins would be made from a an amount of a certain material that was commensurate with a value that was exactly equal to the amount of money the coin piece was meant to represent. For example, a nickel used to be composed of five cents worth of nickel. However, inflation and other factors have led to the government ending this practice. Now, currency is more symbolic than intrinsically valuable.

When deflation strikes a countries economy, the physical currency appreciates in value. When inflation occurs in the economy of a particular country, the currency of that country depreciates in value. This means that it takes more of the currency to buy the same money. Although the nominal values of flat currency remain fixed, the real values that these currencies possess fluctuates with the good and, more often, bad decisions of the people who have grabbed the power to control a country's economic prospects. More and more, these people play games with the fluctuating real values of currency. Currencies are even openly traded. Zimbabwe and the Weimar Republic are two of the countries that had currencies which suffered from severe hyperinflation and were devastated. When the government creates too much currency out of thin air, the inflation rate will rise to a level that exceeds their target level. This can be very bad and lead to higher interest rates and economic stagnation. Although currencies used to be backed by gold, they are no longer.

Currency is what makes it possible for modern society to no longer need to rely upon the trade and barter system that was once the norm.

Answer 2

gold