the moneymoney market instruments include

Investors only receive a modest return on investment. Second, assets in money markets are mostly issued by governments or corporations to stabilize the cash flow. There are two primary differences between a money market and a capital market.įirst, money markets are associated with the lending and borrowing of securities in the short run, usually, one year or less, whereas a capital market supplies financial assets in the medium to long term (more than one year). To learn more about money creation, check out our explanation on banks. For example, you can place an order at a furniture store but only pay the invoice after the goods are delivered. For example, a wooden writing desk costs £50 which is more costly than a £6 plastic table.ĭeferred payment means that you can pay for something after the transaction is carried out. Money is a unit that allows us to compare the relative values of goods and services in the marketplace. These two functions together are known as the unit of account function of money. An alternative to holding cash is purchasing financial assets such as bonds, shares, or physical assets such as a house or a piece of art. However, inflation affects it and it devalues over time.

It’s a value storage: money is an asset that allows people to store their wealth.

With money, people can trade their products quickly without having to look for an equivalent item. This wasn’t so effective as equally valuable goods or services were not always available for an exchange.

It's an exchange medium: in the old days, goods were traded through ‘ barter’ (swapping).Money serves two main functions in the economy: It is also a store of value for future transactions. Money is a medium of exchange or a means of payment. Measuring Domestic Output and National Income.Sources of Revenue for State Government.Sources of Revenue for Local Government.Monetary Policy Actions in the Short run.Long-Run Consequences of Stabilization Policies.Expansionary and Contractionary Fiscal Policy.Factors Influencing Foreign Exchange Market.Comparative Advantage vs Absolute Advantage.Expansionary and Contractionary Monetary Policy.Equilibrium in the Loanable Funds Market.

The moneymoney market instruments include