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2.4 Financial markets and monetary policy (A-level only)

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Question 39

Which one of the following combinations best distinguishes between the functions of the money market and the capital market?

A

Money market: The market where firms issue new shares to raise long-term equity.

Capital market: The market where foreign currency contracts are settled at a future date.

B

Money market: The market where high-street banks offer long-term mortgage products.

Capital market: The market where short-term government debt is converted into retail deposits.

C

Money market: The market for trading short-term liquid debt instruments such as Treasury bills.

Capital market: The market for issuing and trading long-term financial assets like shares and corporate bonds.

D

Money market: The market where the central bank conducts all quantitative easing operations.

Capital market: The market where commercial banks trade foreign exchange for immediate settlement.

Markscheme

2.4 Financial markets and monetary policy (A-level only) Questions

  1. A Level
  2. /Economics
  3. /2.4 Financial markets and monetary policy (A-level only)

176 exam-style questions on AQA A Level Economics 2.4 Financial markets and monetary policy (A-level only), covering 2.4.1 The structure of financial markets and financial assets, 2.4.2 Commercial banks and investment banks, 2.4.3 Central banks and monetary policy, and 2.4.4 The regulation of the financial system. Each one has a worked solution and a mark scheme showing where the marks go.

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