Definition
- Medium of exchange
- A medium of exchange acts as an intermediary between buyer and seller, so people sell goods and services for money and use the money to buy others.
Example
Can you think of an example of medium of exchange?
A plumber is paid £120 for fixing a boiler and spends it at the supermarket. She never has to hunt for a grocer who happens to want a boiler fixed.
Test yourself
Can you name the four functions of money?