Medium Of Exchange

Posted in Finance, Accounting and Economics Terms, Total Reads: 101

Definition: Medium Of Exchange

Medium Of Exchange is the intermediary which enables the exchanges of goods and services between two parties. When one party is in need of something which other party has, then the first party exchange the goods required in exchange of something which second party need, this system was known as Barter system where things get exchanged in exchange of something else.

Example of barter system. The medium of exchange has developed over time, Earlier in barter system there was no fixed medium of exchange to the modern economy where money is treated as the fixed medium of exchange and every valuable items is having some monetary value.

One should not confuse with various payment options like E wallets, credit cards, cheques as medium of exchange, for all these payment options the medium of exchange is money only. The medium of exchange may vary from region to region, For example the value of currency changes from region to region.


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