1. The trade of one good or asset for another. Exchange is the most basic form of economic activity. It requires a coincidence of wants between the two parties: each must want what the other possesses. The process of exchange can be represented in an Edgeworth box. See also voluntary exchange. 2. A place where trading is carried out: thus shares were traded at the stock exchange, com was traded at a com exchange, and workers were hired at a labour exchange. In many cases most of the trade is nowadays done electronically, so that a stock exchange is often an institution rather than a physical place. See also commodity market.
Reference: Oxford Press Dictonary of Economics, 5th edt.