In Comparing Money Market Instruments to Capital Market Instruments, We

question 34

Multiple Choice

In comparing money market instruments to capital market instruments, we can say that

• A)money market instruments tend to be less risky and less liquid than capital market instruments.
• B)money market instruments tend to be more risky, but less liquid than capital market instruments.
• C)money market instruments tend to be more risky and more liquid than capital market instruments.
• D)money market instruments tend to be less risky, but more liquid than capital market instruments.

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Definitions:

Binding Price Floor

A minimum price set by the government above the equilibrium price, causing a surplus of the product in the market.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers.

Binding Price Floor

A price floor set above the equilibrium price, causing a surplus by legally preventing the price from falling to its natural equilibrium level.

Surplus

The situation in which the quantity supplied of a good exceeds the quantity demanded, often leading to a drop in prices.