Final answer:
The conversion of a barter economy to one that uses money increases efficiency by reducing transaction costs.
Step-by-step explanation:
The conversion of a barter economy to one that uses money increases efficiency by reducing transaction costs.
In a barter economy, goods and services are exchanged directly, requiring a double coincidence of wants. This means that both parties must find someone who has what they want and is willing to make the exchange. It is difficult to arrange such trades in a modern economy with its extensive division of labor.
Money serves as a medium of exchange, acting as an intermediary between the buyer and the seller. Instead of exchanging goods directly, people use money to facilitate trade, making transactions much easier and more efficient.