Medium of Exchange: Right from the beginning, money has been performing the important function of medium of exchange in the society. 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. In the same way, all sections of society sell their services in exchange for money and with that money, buy goods and services which they need. Money, working as a medium of exchange, has eliminated inconvenience which was faced in barter transactions.
FAQs
Explain the 'medium of exchange' function of money.? ›
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.
What is the medium of exchange and function of money? ›A medium of exchange is a portable instrument that is used as an intermediary to facilitate the sale and purchase of goods between parties. In modern economies, the medium of exchange is currency.
Which of the following defines the medium of exchange function of money? ›Answer and Explanation: The correct answer is d. Money that is widely accepted in exchange for goods and services . In an economy, the medium of exchange function of money refers to the use of money by different individuals to exchange products/services.
What does it mean for money to be a medium of exchange quizlet? ›Money is a medium of exchange when it is used to facilitate trade between buyers and sellers. Money is a store of value when it is used to transfer wealth from the present to the future. Money is a unit of account when it is used to communicate the market value of goods and services.
Which one of the three functions of money is a medium of exchange what is it your answer? ›In practice, money serves three primary functions: Medium of Exchange: Money facilitates trades between buyers and sellers better than bartering, which requires trading one good or service directly for another. Store of Value: In this role, money serves as a way to hold wealth for future use.
What is a medium of exchange example? ›Most forms of money are categorised as mediums of exchange, including commodity money, representative money, cryptocurrency, and most commonly fiat money. Representative and fiat money most widely exist in digital form as well as physical tokens, for example coins and notes.
Why is medium of exchange the most important function of money? ›Medium of exchange.
Money's most important function is as a medium of exchange to facilitate transactions. Without money, all transactions would have to be conducted by barter, which involves direct exchange of one good or service for another.
A printed US bill can serve all three functions of money: act as a medium of exchange, store of value, and unit of account.
What is the primary function of money? ›One of the primary functions of money is as a medium of exchange as it can be used for any or all transactions wherein goods or services are purchased or sold. Therefore, one can buy or sell products in exchange for money.
What are the four characteristics of money? ›In general, there are four main characteristics that money should fulfill: durability, divisibility, transportability, and inability to counterfeit.
What is an example of a medium of exchange quizlet? ›
Anything that serves as a medium of exchange, a unit of account, and a store of value. Example: I traded a diamond necklace for a certain amount of food or trade something that is worth that value of the object.
What is the main medium of exchange in the United States? ›The US dollar plays a central role in international trade of both goods and financial assets.
How does money act as a medium of exchange brainly? ›Expert-Verified Answer
The money function as a medium of exchange as it allows people to more easily buy and sell products.
Money functions as a medium of exchange, allowing individuals to trade goods and services with one another. It also serves as a store of value, allowing people to save wealth over time. Lastly, it functions as a unit of value, enabling people to compare the worth of different items.