Multiple choice

Very often we read in various newspapers about the activities of the Money Market. What are the main activities of the Money Market?

  1. It provides short term funds to the Government and public sector organizations.
  2. Businessmen and others get short term funds to meet their day-to-day needs of the working capital.
  3. Money market is nothing but another name of the forex market. Only Foreign currencies are purchased and sold there.

  1. Only 1

  2. Only 2

  3. Only 3

  4. 1 and 2 only

  5. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The money market facilitates short-term borrowing and lending for governments (Statement 1) and businesses working capital needs (Statement 2). Statement 3 is incorrect - the money market deals in short-term debt instruments (treasury bills, commercial paper, certificates of deposit), not foreign currencies. The forex market is a separate market for currency trading.

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