CBSE Class 10 Answered

The introduction of money resulted in the end of the barter system where goods were exchanged according to the needs. Now, money acts as an intermediate in the exchange process, and thus, it is known as a medium of exchange. Anyone can exchange his goods for money and buy commodities that are required by him or his family.

For examples, a fruit seller wants to sell his fruits in order to buy wheat. In absence of money, he will have to look for some person who wants to sell wheat and buy fruits. This is not easy and always possible. However, in the case of availability of money as a medium of exchange, the fruit seller just has to find a buyer for his fruits. Once fruits are exchanged for money, he can now purchase wheat from the market.