Explain the significance of ’ medium of exchange’ function of money.
or
Explain the ‘medium of exchange’ function of money.
The primary function of money is acting as a medium of exchange between two parties involved in a transaction. It avoids the practical problems of wastage of time and resources, involved with the barter system of exchange and it improves the transactional efficiency. It also promotes allocational efficiency in the trade and production of goods and services.