Since money acts as an intermediate in the exchange process, it is called a ____.

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Detailed Solution

Since money is an intermediate in the exchange process, it is called a medium of exchange.
In early times, people used to follow the barter system of exchange. Money simplifies the procedure of business by serving as a mediator. For example, Suppose a vegetable vendor wants to get a haircut. It will be difficult for him to find a barber who will give him the desired haircut at the cost of his vegetables. In addition, this exchange is possible only if the barber wants to purchase the vegetables. In conclusion, it will be possible for the vegetable vendor to sell his vegetables in the market and get his haircut by paying the barber in cash with the help of money earned by selling vegetables.

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