Answer to Question #46671 in Macroeconomics for Bertha Tjahikika

Question

Discuss two main differences between the money market and capital market

Answer 1

The main differences between the money market and capital market is that money market intends to serve the sphere of сirculation and capital operates there as a medium of exchange and payment. Capital market serves process of expanded reproduction. Also the money market is used to lend and borrow in short-term finance (money, collateral loans, acceptances), while the capital market is used to lend and borrow in long-term finance (stocks, shares, debentures, bonds).