Financial markets are in equilibrium when the quantity demanded of any security is _________________ the quantity supplied of that security.

Question

Quizplus · Accepted Answer

Financial markets are said to be in equilibrium when the quantity demanded of any security is equal to the quantity supplied of that security. At this point, there is no excess demand or excess supply, and the market price of the security remains stable. If the quantity demanded is more than the quantity supplied, there will be excess demand leading to an increase in the security’s price. Similarly, if the quantity supplied is more than the quantity demanded, there will be excess supply leading to a decrease in the security’s price. Therefore, only when the quantity demanded is equal to the quantity supplied, the market price remains stable, and the market is in equilibrium.

Financial Markets Are in Equilibrium When the Quantity Demanded of Any