Money solves the problem of double coincidence of wants byacting as a medium of exchange. Double coincidence of wants implies a situationwhere two parties agree to sell and buy each other’s commodities., i.e., whatone party desires to sell is exactly what the other party wishes to buy. Moneydoes away with this tedious and complex situation by acting as a medium ofexchange that can be used for one and all commodities. For example, if anice-cream vendor wants a bicycle but the bicycle manufacturer wants clothes,and not ice-creams, then the vendor can use money to obtain a bicycle. He doesneed to adhere to the bicycle man’s needs because money acts as the commonmedium of exchange. Similarly, the bicycle manufacturer can then use the moneyto buy clothes.
