MONEY MARKET, STRUCTURE AND FUNCTIONS OF MONEY MARKETING, Definition: Money market can be defined as a market for short- term loan. The market consists of institutions or individuals who either have money to lend or wish to borrow on a short-term basis. The exchange of goods and services in markets is among the most universal activities of human life. To facilitate these exchanges, people settle on something that will serve as a medium of exchange—they select something to be money.

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define money in relation to money market

Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as a medium of exchange, a unit of account, a store of value and sometimes, a standard of deferred payment.

Money was historically an emergent market phenomenon that possess intrinsic value as a commodity; nearly all contemporary money systems are based on unbacked fiat money without use value Its value is consequently derived by social convention, having been declared by a government or regulatory entity to be legal tender; that is, it must be accepted as a form of payment within the boundaries of the country, for “all debts, public and private”

We can understand the significance of a medium of exchange by considering its absence. Barter occurs when goods are exchanged directly for other goods. Because no one item serves as a medium of exchange in a barter economy, potential buyers must find things that individual sellers will accept. A buyer might find a seller who will trade a pair of shoes for two chickens

Define money and capital market.

conomic tools for nation building


factors affecting the expansion of industries

mineral resources and the mining industries

  Identify the types and functions of the institutions.

  Explain the types and features of securities.

  Explain the process of and requirements for accessing the capital market

  List the benefits of the capital market.

Demonstrate the understanding of the meaning, transaction and trading methods in the secondary market.

Instruments used in the money market

  1. Treasury bills: Treasury bill is normally issued by the central bank of a country, which assists the government to borrow money from the money markets on short term basis.
  2. Bill of exchange: Bill of exchange refers to a promisory note which shows the acknowledgement of indebtedness by a debtor to his creditor and his intention to pay the debt on demand or at an agreed time in future, normally ninety (90) days.
  • Call money funds: The call money fund or market is a special arrangement in which the participating institutions invest surplus money for their immediate requirement on an overnight basis with the interest and withdrawal on demand. The call money has an advantage of early return and at the same time are withdraw able on demand. It provides solution to the immediate stock of liquidity pressures in the money markets.

Institutions involved in the money market

Institutions involved in the money markets include:

  1. Central bank
  2. Commercial banks
  3. Acceptance houses
  4. Finance houses
  5. Discount houses
  6. Insurance companies

Advantages of money market

  1. Provision of finance: Money markets enables entrepreneurs and investors to raise enough finance through borrowing to run their businesses.     
  2. Creation of extra income: The money invested in money market is capable of yielding extra income in form of interest.
  3. Promotion of economic development: Economic growth and development is enhanced through borrowing from money market.
  4. Ability to recall invested funds: Funds invested in the money markets are very easy to recall.
  5. It enhances savings: Money markets provides opportunity for those having surplus fund to invest thereby enhancing savings.
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  2. total output continues to increase from 10 to 30, to 60, to 120 and so on. But as the fifth (5th) labour was used or employed, there was a drop in production from 120 to 100. This is the stage at which the law of diminishing returns sets in as every additional unit of labour brings about a decrease in the total output
  3. Importance of the law of diminishing returns
  4. Proper combination of factors of production:  The law of diminishing returns helps the entrepreneur to combine properly the factors of production to prevent wastage
  5. Changes in scale of production: The law of diminishing returns helps entrepreneurs to change the scale of production through the variation of the quantities of all input
  6. It ensures efficiency: As more and more variable factors are added to a fixed factor, it eventually comes to a profitable level and productivity and efficiency are maintained using labour requires little or no formal education.
  7. They do not use mental effort,
  8. rather, they make use of physical effort or energy in production, hence their jobs are popularly referred to as brown collar jobs.

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