Which characteristic of cash refers to its ability to be divided into smaller units?

The characteristic of cash that refers to its ability to be divided into smaller units is divisibility. This feature is crucial because it allows cash to facilitate transactions of varying sizes. For example, a dollar can be broken down into smaller denominations like quarters, dimes, and pennies, enabling consumers to make precise payments for goods and services. This flexibility is essential for effective commerce, as it helps match the price of any item with an appropriate amount of cash.

In contrast, durability pertains to how well cash endures physical wear and tear, and uniformity ensures that all pieces of cash are of the same type and value, making them easily recognizable. Limited supply touches on the controlled amount of currency issued by monetary authorities to maintain value. While each of these characteristics plays a vital role in the functionality of currency, divisibility is specifically what allows cash to be segmented easily for transactions of any size, highlighting its versatile nature in economic exchanges.