What are the money markets and what are the capital markets? How do they differ? What are their respective activities

Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter17: Stabilizing The National Economy
Section: Chapter Questions
Problem 18AA
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What are the money markets and what are the capital markets? How do they differ? What are their respective activities?

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Step 1

Money market:

  • 1)Money market is a short-term market where instruements like commercial papers, treasury bills, certificate of deposits, etc. 
  • 2) The risk is low in the money market
  • 3) It inlcudes instruments like: treasury bills, trade credit, certificate of deposits, commercial papers, and so on.
  • 4) Investors in the money market are commercial bank, central bank, non-financial institutions, chit funds and so on.
  • 5)  Money market is highly liquid.
  • 6) The money market is casual in nature.
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