Medium of Exchange

The medium of exchange is defined as a system that enables the exchange of items. Its major purpose is to facilitate sales. In the modern economy, the medium of exchange is currency. The medium of exchange should have market value and consumers should also consider the medium of exchange so that it will remain in constant demand.

Barter system, which was prevalent in the world centuries ago, trade between two parties was possible only if the other party has the has a commodity that another party desired, and vice versa. Fortunately, in modern times with the medium of exchange being the currency complex exchanges are possible.