Question

What is the role of money and how does money facilitate exchange?

Answer 1

Role of Money:

Any tool that is entirely trusted in the marketplace both by dealers of goods and services as the amount for those goods and services by lenders as payment for debts.

Money is usually defined in three functions pr services done with it. It serves as a medium of exchange, as a store of value and as a unit of account.

Exchange facility:

Money's most significant role is as a means of exchange to promote transactions. Without money, all economic activities would have to be accompanied by exchange, which includes direct trade of one good or service for another. The problem with this system is that in order to obtain a specific good or service from a supplier, one has to occupy a good or service of equivalent cost, which the supplier also wants. in a barter system, an interchange can take place only if there is a double parallelism of wants between two transacting persons or parties.