What it is:
A financial market is a location where buyers and sellers meet to exchange goods and services at prices determined by the forces of supply and demand.
How it works (Example):
A financial market may be a physical location or a virtual one over a network (for example, the Internet). Here, people who have a specific good or service they want to sell (the supply) interact with people who wish to buy it (the demand).
Prices in a financial market are determined by changes in supply and demand. Ifdemand is steady, an increase in supply results in a decline in prices and vice versa. If supply is steady, a rise in demand results in a rise in prices and vice versa. These relationships are demonstrated in the following graphs:
Why it Matters:
A financial unemployment).facilitates transactions between buyers and sellers, as well as between producers and consumers. Markets experience fluctuations and price shifts resulting from changes in supply and demand. These changes result from fluctuations in many variables including, but not limited to, consumer preferences and perceptions, the availability of materials and external sociopolitical events (for example, wars, government spending and