Why is money called the medium of exchange ?

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An Intiative by Sri Chaitanya

Goods are being bought and sold with the use of money.

Use of money has made things easy to exchange.

Money acts as an intermediate in the exchange process.

Without exchange of money nobody can fulfil their needs and requirements.

answer is C.

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Detailed Solution

Money is the medium of exchange because it acts as an intermediate in the exchange process.
Money is used for the buying/selling of any good or service and is widely accepted. We no longer have to face the problem of double coincidence of wants. A farmer can sell his produce in exchange for money and buy any goods with the same money. If you produce wheat and want to consume milk, you no longer have to find someone who can exchange milk for your product. Money acts as a facilitator in the trade of goods and services. Money overcomes the problems of the barter system. Therefore, it is the medium of exchange.

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