ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -Money facilitates transactions of goods and services as a medium of exchange. Producers sell their goods to wholesalers in exchange of money. Wholesalers, in turn, sell their goods to the retailers and the retailers sell these goods to the consumers in exchange for money.

Detailed explanation-3: -Money is used as a medium of exchange because it’s the intermediary in the exchange process.

Detailed explanation-4: -Money is better than the barter system because; it is durable, portable, interchangeable, easily divisible into smaller units, and is universally recognized by most people. On the other hand, the barter system has challenges presented by the double coincidence of wants, bulkiness of goods, and time consumption.

Detailed explanation-5: -Bobby Seale Quotes Money is the medium of exchange, and it’s how you make things happen.