Topic Details (Notes format)

Money Market and Capital Market

Subject: Economics

Book: Comprehensive Indian Economy

India’s financial markets are split into the money market (short-term funds) and capital market (long-term). The money market includes instruments like Treasury Bills, Commercial Paper, and inter-bank lending. The capital market is governed by SEBI, featuring equity (stocks) and debt (bonds). Effective regulation ensures transparency, investor protection, and efficient fund mobilization for development. Students should grasp the significance of liquidity management, interest rate formation, and how capital market reforms (e.g., dematerialization, listing norms) boost investor confidence and corporate governance. Practice identifying differences, key instruments, and regulatory frameworks for robust exam-oriented preparation.

Practice Questions

What does the term “capital account” refer to in the balance of payments?

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Which of the following is an example of a renewable resource?

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Which of the following is NOT an example of a direct tax?

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What is the main function of the Reserve Bank of India (RBI)?

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Which of the following is considered a public good?

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What is meant by “stagflation”?

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What is meant by “crowding out” in economics?

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What does “primary sector” of the economy include?

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Which of the following is an example of a non-renewable resource?

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Which of the following best describes “capital formation”?

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