Why is money called a “medium of exchange”?

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Money acts as an intermediate in the process of exchange.

It creates a double coincidence of want.

Exchange of goods for goods

It is not widely accepted.

answer is A.

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Detailed Solution

Money is a medium of exchange because it is an intermediate in the exchange process.
We cannot think of a single transaction without the use of money. It is widely accepted and recognised as legal tender, which means we can buy any goods and services in exchange for money. For example, a farmer wants money to purchase fertilisers and seeds, so he sells his 20 kg of wheat to a flour-making company, and in return, he gets money, now buy fertilisers and seeds with that money. What if, in exchange, he gets rice? Is he able to buy seeds and fertilisers? No, unless seeds and fertiliser companies agree to take rice. That's why money is the only medium of exchange.

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