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How does money solve the problem of double coincidence of wants? Explain with an example.


In an economy where money is in use, money by providing the crucial intermediate step eliminates the need for double coincidence of wants. It is no longer n necessary for the shoe manufacturer to look for a farmer who will buy his shoes and the same time sell him wheat. All he has to do is find a buyer for his shoes. Once he has exchanged his shoes for money, he can purchase wheat or any other commodity in the market. Since money acts as an intermediate in the exchange process, it is called a medium of exchange.

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