money market

(noun)

A market for trading short-term debt instruments, such as treasury bills, commercial paper, bankers' acceptances, and certificates of deposit.

Related Terms

Examples of money market in the following topics:

  • Commercial Banks

    • A commercial bank lends money, accepts time deposits, and provides transactional, savings, and money market accounts.
    • A commercial or business bank , is a type of financial institution and intermediary that lends money, accepts time deposits, and provides transactional, savings, and money market accounts.
    • Commercial banks engage in the following activities: the processing of payments; accepting money on term deposit; lending money by overdraft, installment loan, or other means; providing documentary and standby letters of credit guarantees, performance bonds, securities underwriting commitments and other forms of off- balance sheet exposures; and the safekeeping of documents and other items in safe deposit boxes.
    • An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero.

  • Measuring the Money Supply

    • In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time.
    • In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time.
    • In economics, the monetary base (also base money, money base, high-powered money, reserve money, or, in the UK, narrow money) is a term relating to (but not being equivalent to) the money supply (or money stock) or the amount of money in the economy.
    • M2: Represents money and "close substitutes" for money.
    • Less liquid assets include money market deposits and savings account deposits.

  • Control of the Money Supply

    • When a central bank is "easing", it triggers an increase in money supply by purchasing government securities on the open market thus increasing available funds for private banks to loan through fractional-reserve banking (the issue of new money through loans) and thus the amount of bank reserves and the monetary base rise.
    • The central bank retains tight control over its nation's money supply through the use of open market operations, the discount rate, and reserve requirements.
    • Open market operations, the most dominant instrument of monetary policy, are the behavior of a nation's central bank to trade or purchase government securities for cash in attempts to expand or contract the total money supply.
    • This is why they advocated a non-interventionist approach—one of targeting a pre-specified path for the money supply independent of current economic conditions— even though in practice this might involve regular intervention with open market operations (or other monetary-policy tools) to keep the money supply on target.
    • Summarize the argument against the role of open market operations in determining the nation's money supply

  • Open Market Operations

    • They can achieve this through expansionary monetary policy, buying government bonds and increasing the money supply.
    • The usual aim of open market operations is to control the short term interest rate and the supply of base money in an economy, and thus indirectly control the total money supply.
    • This involves meeting the demand of base money at the target interest rate by buying and selling government securities, or other financial instruments.
    • The market for U.S.
    • Treasury securities market is the broadest and most active of U.S. financial markets.

  • Marketing Data Types

    • While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labor) in exchange for money from buyers.
    • Ad hoc auction markets Markets for intermediate goods used in production of other goods and services
    • Illegal markets such as the market for illicit drugs, arms or pirated products
    • While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labor) in exchange for money from buyers.
    • The exchange of goods or services for money is a transaction.

  • Addressing Market Needs

    • Examples of markets include: Physical retail markets, such as local farmers' markets, shopping centers and shopping malls Non-physical internet markets Ad hoc auction markets Markets for intermediate goods used in production of other goods and servicesLabor markets and international currency and commodity markets Stock markets, for the exchange of shares in corporations Artificial markets created by regulation to exchange rights for derivatives that have been designed to ameliorate externalities, such as pollution permits.
    • Illegal markets such as the market for illicit drugs, arms, or pirated products
    • The exchange of goods or services for money is called a transaction.
    • Market segmentation is the division of the market or population into subgroups with similar motivations.
    • Market trends are the upward or downward movement of a market during a period of time.

  • Growth Through Monetary Policy

    • Monetary policy rests on the relationship between the rates of interest in an economy (the price at which money can be borrowed) and the total money supply.
    • All have the effect of contracting the money supply and, if reversed, expand the money supply.
    • The primary tool of monetary policy is open market operations.
    • All of these purchases or sales result in more or less base currency entering or leaving market circulation.
    • Usually, the short-term goal of open market operations is to achieve a specific short-term interest rate target.

  • Types of Currency

    • However, nearly all contemporary money systems are based on fiat money.
    • Fiat money is money that derives its value from government regulation or law.
    • Some bullion coins such as the Australian Gold Nugget and American Eagle are legal tender, but they trade based on the market price of the metal content as a commodity, rather than their legal tender face value (which is usually only a small fraction of their bullion value).
    • Commercial bank money differs from commodity and fiat money in two ways.
    • Fiat, Commodity, and Commercial Bank money are three main types of money

  • Functions of Money

    • Money acts as a standard measure and common denomination of trade.
    • Money functions as:
    • A unit of account is a standard numerical unit of measurement of the market value of goods, services, and other transactions.
    • This is why diamonds, works of art, or real estate are not suitable as money.
    • The value of the money must also remain stable over time.

  • The budget

    • Marketing mix components must be evaluated as part of an overall marketing strategy.
    • Therefore, the organization must establish a marketing budget based on the required marketing effort to influence consumers.
    • The marketing budget represents a plan to allocate expenditures to each of the components of the marketing mix.
    • A sales promotion budget should also be determined, allocating money for coupons, product samples, and trade promotions.
    • A common question that marketers frequently ask is, "Are we spending enough (or too much) to promote the sale of our products?