Question

When we speak of money's advantage over barter trade, we are primarily speaking of  

      money's function as:

            a. a medium of exchange

            b. a unit of account

            c. a store of value

            d. a standard of deferred payment

( I originally choose option C, but I was wrong)

Answer 1

A medium of exchange

Barter exchange refers to exchange of goods for goods. Barter system can work only when both buyer and seller are ready to exchange each other's goods which is known as double coincidence of wants. As a medium of exchange, money has removed the major difficulty of lack of double coincidence of wants in barter system. It separates the acts of sale and purchase of goods and services and helps both the parties in obtaining maximum satisfaction. A buyer can buy goods through money and a seller can sell goods for money.