How does money act as a medium of exchange?

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It holds a value

It is widely acceptable

It is issued by the government of India

All of the above

answer is D.

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Detailed Solution

Money act as a medium of exchange as it holds a value, is widely acceptable and is issued by the government of India.
Money holds value and can be used as a medium of exchange. The use of money has made it easier to live in this world. In earlier times, the barter system was used as a means of exchange in which one commodity was exchanged for another. But the system had many advantages. Thus, money was widely accepted as a medium for exchange. In day-to-day transactions, goods and services can be bought and sold with the help of money. Transactions can be made with money as a person holding money can exchange it for any commodity. It can also be exchanged while consuming any service, such as a doctor, teacher, etc. Money makes it easier to exchange any commodity or service.

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