The difference between the money market, the capital market and the foreign exchange market
Financial markets are split into three types based on what they trade. The money market handles short-term borrowing, the capital market channels long-term finance, and the foreign exchange market trades currencies.
Real World
When the pound fell sharply after the Brexit vote in June 2016, the foreign exchange market instantly repriced sterling, making UK imports costlier — a direct real-world link between the forex market and domestic inflation.
Exam Focus
Contrast all three markets by time horizon and asset type in one sentence each — examiners reward clear, concise distinctions over lengthy description of just one.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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