Market is an essential element of an economy. In simple terms, the market is defined as the place where sellers and buyers meet. The market is an abstract concept. The market does not have to be physical. An economy needs the market as a place of transaction for economic agents, whose interests and needs vary. In that market, there is an exchange or buying and selling factors of production, goods and services, as well as assets. There are several types of markets. We know the existence of goods market and labour market. In addition, there are also money market and financial market.
The goods market is a market that trades goods and services. In the market, goods and services produced from production activity are traded. The goods market represents the real sector, where economic agents produce, consume, and invest. Economic activities carried out by households and firms need and produce goods and services traded in the goods market. The goods market not only trades the final products produced by the economy but also intermediate products (raw materials for production activity).
The money market is a place where the demand and supply of money meet. In the money market, households, firms, banks, and other financial intermediaries interact and transact money, both as a means of payment and as an asset. In the money market, money is transacted for liquidity and financing purposes. Meanwhile, the financial market is a place where financing and financial assets are transacted. Sellers and buyers in financial market are not only parties with excess funds and those who need funds but also those who trade financial assets in the context of investment or trade.