Question

"Money acts as an intermediate in the exchange process". Explain.

Answer 1

Money is the modern form of currency that is accepted as the medium of exchange and is a measure of value.

In a Barter system, where goods are directly exchanged without the use of money, double coincidence of wants is essential. By serving as a medium of exchange, money removes the difficulties associated with the Barter system. Money is authorised by the government of the country and nobody can legally refuse it as a medium of exchange for goods or services. Thus, it can be concluded that money acts as an intermediate in the exchange process.