Money as a Medium of Exchange

In a barter system, where people trade one good or service directly for another without using money, both people have to want exactly what the other is offering at the same time, a limitation called the "double coincidence of wants." Money solves this problem by acting as a medium of exchange, something widely accepted in trade, so a person can sell what they have for money and then use that money to buy what they actually want, without needing to find someone with a matching, simultaneous want.

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