When economists say that money serves as a medium of exchange, they mean that it is a monetary unit for measuring and comparing the relative values of goods.
A medium of exchange is a that intermediary instrument or system which is used to facilitate the sale or purchase, or even trade of goods between parties.
For a system to act as a medium of exchange between two parties, it must represent a fixed standard of value. But for this all parties must accept that standard. In modern economies, the medium of exchange is currency or money.
Money enables everyone who possesses it to participate as an equal market player. When consumers use money to purchase an item or service, they make a bid effectively in response to an asking price.
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