mutual transfer of goods, money, services, or their equivalents; also the marketplace where such transfer occurs, such as a stock exchange
or a commodity exchange. In early human society, exchange of unessential articles, such as jewelry, was common, but no group could afford to rely on another group for the necessities of life. Gradually, division of labor led to the barter economy, in which articles were produced for exchange. Modern capitalistic society, although an outgrowth of the exchange economy, is no longer based on exchange. Strict exchange depends on barter; in modern society the money and price system—in which goods and services are produced in exchange for specified amounts of a standard currency—has largely replaced barter, except for limited arrangements done on a local basis (such as within a town or village). Broadly, the term is now used to signify exchange of goods and services for money. The price of the various factors in exchange is determined by their supply and market demand. Conversion of one country's currency into that of another by means of still others is called arbitrage or arbitration of exchange. The term exchange
also refers to the amount of money necessary to buy a given amount in a foreign country, usually for the foreign exchange
See H. E. Evitt, Exchange and Trade Control in Theory and Practice (4th ed. 1960) and A Manual of Foreign Exchange (7th ed. 1971); E. Sohmen, Flexible Exchange Rates (1961, rev. ed. 1969); S. W. Arndt et al., ed., Exchange Rates, Trade and the U.S. Economy (1985).
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