ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Money refers to a common medium of exchange that is issued under the law of government and acts as a legal tender for the whole country. The primary function of money is that money serves as a common medium of exchange where money is considered as a mode of exchanging goods.

Detailed explanation-2: -Money acts as a medium of exchange as it acts as an intermediate in the exchange process and transactions. Buying and selling of commodities are done with the exchange of money.

Detailed explanation-3: -Money As a Medium of Exchange Money enables anyone who possesses it to participate as an equal market player. When consumers use money to purchase an item or service, they are effectively making a bid in response to an asking price.

Detailed explanation-4: -Money helps to facilitate trade because people in the economy generally recognize it as valuable. Money is called medium of exchange because money is a widely accepted token that can be used for exchange of any good or service. In old days, barter system was used as medium of exchange and later it was gold.