Question

1. Define the different market arenas (labor market, goods and services market, and money market) and link them to the four macroeconomics components (households, firms, government, and outsiders).

2. For each market, explain which component is a buyer or a seller. (For instance: in the labor market, households are sellers. Whereas firms, the government, and outsiders are buyers, because households sell their know-how and skills to all of them.)

Answer 1

LABOR MARKET

labor market /job market functions through the interactions of workers and employees. It looks at the suppliers of labour service (workers) and the demand of labor service (employees).At the macro economic level ,supply and demand are influence by domestic and international market dynamic ,as well as the factors such as immagations ,age of population,and educational level.A labour market is a market where people offer their skills to employers in exchange of wages, salaries, and other forms of compensations. Under the standard labor market theory , labor is a resources

GOODS AND SERVICE MARKET

The goods and service market is where household purchase consumable goods and business firms selll their wares.The market includes stores, the internet and other place where consumer goods and services are exchanged.

Economists uses the circular flow model .The money flows from household to business firm through goods and service market. In return household receive the items they have purchased. also the business firm pay to household rent , wages, divident ,profitin return to their service.

In goods and service market,business firms are sellers and households are the buyers

MONEY MARKET

It refers to the trading in very short run debt investment .It involveslarge volume of trades between institutions and traders.Institution that participate in money market includes banks that lend to one another and to large companies in euro cuurrency.The US government issues teasury bills in money market with maturities that range from a few days to one year. Primary dealers buy them in large amount directly from government to traders between themselves / sell to individuals investors.

In money market , banks and government institutions are the sellers of the bonds and teasury bills whereas firms and individuals are the buyers