Money solves the problem of double coincidence of wants by acting as a medium of exchange. If a shoe manufacturer wants to sell shoes in a market and buy rice under barter exchange, both parties selling shoes and rice have to agree to sell and buy each other?s commodities and this creates a problem which is referred to as double coincidence of wants. This problem is overcome by introduction of money. Here the shoe manufacturer will first exchange shoes that he has produced for money and then exchange the money for rice.
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