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Meaning of exchange

In general speaking, the exchange is a mutual exchange of goods. But in economics the meaning of exchange is different. Exchange is the economic activity by which people satisfy their wants. So the exchange is the process where people mutually offer their goods and service and satisfy their respective wants. for exchange, there should be at least two people or two different goods or services. There is mutual benefit for both the parties by the exchange.

Money Exchange

For instance, Sagun rice does not have pulses. Puja has pulses but not rice. In this case or situation, Sagun can offer rice to Pooja and Pooja can offer Pulses to Sagun. This is the exchange and both Sagun and Pooja will be benefited. Nowadays money has made it easier to exchange.

Vishal sour goods which are excess for us and purchase those goods that are needed for us. This is an exchange. Exchange occurs not only in the domestic market but also in the international market. International trade occurs due to mutual needs of goods and fulfilled their wants. for example, Nepal is rich in herbal products and France is rich in wind production. In this case, it provides herbal products to France and France provides wine to Nepal. In this way, people of both countries are benefited from an exchange. the exchange plays a vital role in the economic exchange is possible by hand or barter system and with the help of money.

Types of exchange

In the general, there are two types of exchange;

1. Barter exchange

Barter exchange; if goods or services are exchanged directly, it is said to be a barter exchange. In ancient times people were dependent on Barter exchange due to lack of the evolution of money. Nowadays money works as a medium of exchange but in some places, barter exchange is still in practice.

2. Money exchange

Money exchange; Barter extinct is a very difficult economic activity. Various difficulties of barter exchange made people search for alternatives and money become easier means for exchange. So, the Exchange of money with goods is money exchange. This is a money watch as a medium of exchange. money exchange takes place in different markets.

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