Equivalization
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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.
[edit] See Also
- Apples and oranges - Colloquial term for the "gap" equivalization attempts to bridge
- All Commodity Value - Form of Equivalization
- Medium of exchange - Any form of currency/value utilized in favor of pure barter
- Store of value - Principal that an item chosen to have equivalized economic value must be reliable
- Units of account - Essential example of equivalization applied to economies
- Dimensional analysis - Process of equivalization in Physics, Chemistry, & Engineering
- Proportions - Underlying Mathematical Principal
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