ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In modern economies, the medium of exchange is currency.

Detailed explanation-2: -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.

Detailed explanation-3: -A medium of exchange is a function of money that expedites trade between a buyer and seller because it is widely accepted as payment for a good or service. Most societies use their currency, but stones, salt, gold, and tobacco have been used as a medium of exchange.

Detailed explanation-4: -The most common and generally accepted medium of exchange in the modern economy is money – represented as currency.