Equivalization
Encyclopedia
Equivalization refers to any mathematical method of comparing two or more generally unlike quantity/value scales.
A common example of the utility for an equivalization standard comes in currency markets, where without established exchange rates there is great difficulty making comparisons. For example, dollars, euros, yen have different quantity amounts that would each equal the same implied value. As a solution, an equivalized exchange rate with the United States
dollar set as a value = 1 allows for proportional read on the respective values of other currencies compared with it.
Without any established equivalization standard, there is no intuitive method for inherently knowing which currency is more valuable than another.
The gold standard
was another attempt at equivalizing economic wealth.
A common example of the utility for an equivalization standard comes in currency markets, where without established exchange rates there is great difficulty making comparisons. For example, dollars, euros, yen have different quantity amounts that would each equal the same implied value. As a solution, an equivalized exchange rate with the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
dollar set as a value = 1 allows for proportional read on the respective values of other currencies compared with it.
Without any established equivalization standard, there is no intuitive method for inherently knowing which currency is more valuable than another.
The gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
was another attempt at equivalizing economic wealth.
See also
- Apples and orangesApples and orangesA comparison of apples and oranges occurs when two items or groups of items are compared that cannot be validly compared.The idiom, comparing apples and oranges, refers to the apparent differences between items which are popularly thought to be incomparable or incommensurable, such as apples and...
- Colloquial term for the "gap" equivalization attempts to bridge - All Commodity Value - Form of equivalization
- Medium of exchangeMedium of exchangeA medium of exchange is an intermediary used in trade to avoid the inconveniences of a pure barter system.By contrast, as William Stanley Jevons argued, in a barter system there must be a coincidence of wants before two people can trade – one must want exactly what the other has to offer, when and...
- Any form of currency/value utilized in favor of pure barter - Store of valueStore of valueA recognized form of exchange can be a form of money or currency, a commodity like gold, or financial capital. To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved....
- Principle that an item chosen to have equivalized economic value must be reliable - Units of account - Essential example of equivalization applied to economies
- Dimensional analysisDimensional analysisIn physics and all science, dimensional analysis is a tool to find or check relations among physical quantities by using their dimensions. The dimension of a physical quantity is the combination of the basic physical dimensions which describe it; for example, speed has the dimension length per...
- Process of equivalization in physics, chemistry, & engineering - Proportions - Underlying mathematical principle