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“Money acts as a medium of exchange in transactions”. Substantiate with a suitable answer.


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Money acts as a medium of exchange in transactions - Teachoo (2).png

Money acts as a medium of exchange in transactions - Teachoo.png

  • Money is anything that is generally accepted as a medium of exchange in transactions.

  • A medium of exchange is something that can be used to buy and sell goods and services without involving barter .

  • Money acts as a medium of exchange by facilitating trade and commerce , reducing transaction costs , and increasing efficiency and welfare .

  • Money eliminates the need for double coincidence of wants ,by acting as a medium of exchange that is generally accepted by everyone in the economy.

  • It provides a common measure of value or unit of account , as the value of different goods and services can be expressed in terms of money.
  • For example, if a farmer wants to buy a bicycle from a shopkeeper, he can use money to pay for it instead of exchanging his crops or animals. This makes the transaction easier and quicker for both parties.


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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 13 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.