Question

How is the money used as the medium of exchange explain with examples.

Answer 1

earlier barter system was used to buy goods.
for example: a man wants to sell goat and a man who wants to buy book
this is rather difficult because there must be a double coincidence of wants.
here what the seller wants to sell must be what the buyer wants to buy

thus money is used as a medium of exchange.The seller can sell and the buyer can buy whatever they want without any double coincidence of wants.

Answer 2

money is the money used as the medium of exchange following exactly different from the bater system .Money, by providing the crucial intermediate step eliminates the need for double coincidence of wants.

eg: it is no longer necessary for the shoe manufacturer to look for a farmer who will buy his shoes and at the same time sell him wheat.all he has to do is to find a buyer for his shoes. once he has exchange his shoes for money, he can purchase wheat or any other things.