what is money market constituent and money or goods market
Answers
A money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. The money market is used by participants as a means for borrowing and lending in the short term, from several days to just under a year. Money market securities consist of negotiable certificates of deposit (CDs), bankers acceptances, U.S. Treasury bills, commercial paper, municipal notes, federal funds and repurchase agreements (repos).
Some more information:
BREAKING DOWN 'Money Market'
The money market is used by a wide array of participants, from a company raising money by selling commercial paper into the market to an investor purchasing CDs as a safe place to park money in the short term. The money market is typically seen as a safe place to put money due the highly liquid nature of the securities and short maturities, but there are risks in the market that any investor needs to be aware of including the risk of default on securities such as commercial paper.
The money market is different from the capital market.
Goods market and money market do not operate independently—one influences the other.
Thus, combining these two markets, we determine the values of Y and r that are consistent with equilibrium in these two markets.
The interrelationships or the links between these two markets are:
There is a link between investment and interest rate determined in both the goods market and money market.
Investment is assumed to be determined by interest rate in a negative fashion. We have amply demonstrated here that the interest rate has been determined in the money market. Thus, money market influences goods market.