Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To facilitate short-term borrowing and lending
B
To regulate long-term investments
C
To manage foreign exchange rates
D
To provide equity financing
Understanding the Answer
Let's break down why this is correct
Answer
The primary function of the money market is to provide a place where short-term borrowing and lending of funds can happen. This market helps individuals, businesses, and governments manage their cash needs by allowing them to quickly access money for short periods, usually less than a year. For example, a company might need extra cash for a few months to cover expenses until its customers pay their invoices. By borrowing from the money market, the company can keep running smoothly without waiting for those payments. Overall, the money market plays a crucial role in ensuring that money flows efficiently in the economy.
Detailed Explanation
The money market helps people and businesses borrow and lend money for short periods. Other options are incorrect because Some might think the money market deals with long-term investments; People might confuse the money market with foreign exchange.
Key Concepts
money market definition
Topic
Money Market Dynamics
Difficulty
easy level question
Cognitive Level
understand
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