Money as a medium of exchange means money as a means of payment for exchange of goods and services. Goods and services are exchanged for money when people sell things. Money is exchanged for goods and services when people buy things. The medium of exchange function of money solves the problem of double coincidence of wants inherent in the barter system of trade.
Explain the ‘Medium of Exchange’ function of money?
Answers
Ramesh Kothari
Money as a medium of exchange means money as a means of payment for exchange of goods and services. Goods and services are exchanged for money when people sell things. Money is exchanged for goods and services when people buy things. The medium of exchange function of money solves the problem of double coincidence of wants inherent in the barter system of trade.