Why is money accepted as a medium of exchange?

Money is accepted because it solves a huge problem with direct trade, or bartering. Think about it. Without money, you'd have to find someone who not only has what you want, but also wants exactly what you have to offer. That’s incredibly inefficient. Money acts as an intermediary we all agree on.

Ultimately, its acceptance comes down to collective trust. We accept it as payment because we trust that others will accept it from us later. For modern currencies like the Canadian dollar, this trust is reinforced by the government. It's declared "legal tender," and we have faith in the stability of the institutions backing it. It’s really a powerful social convention that makes our complex economy possible.