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Medium of exchange

Medium of exchange Definition

A medium of exchange is an intermediary used in trade to avoid the inconveniences of a pure barter system.

In such a system, there must be a coincidence of wants before two people can trade - they must want exactly what the other has to offer, when and where it is offered, so that the exchange can occur. A medium of exchange permits the value of a good to be assessed and rendered in terms of the intermediary, most often, a form of money widely accepted to buy any other good.








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