Economists use the term "financial markets" to mean the markets in which
A) firms purchase their physical capital.
B) firms supply their goods and services.
C) households supply their labor services.
D) firms get the funds that they use to buy physical capital.
E) the government borrows to fund any budget surplus.

Question

Quizplus · Accepted Answer

Financial markets refer to markets where firms raise funds through issuing securities such as stocks and bonds. The funds raised are used to finance their investments in physical capital. Therefore, choice D, which refers to firms getting the funds they use to buy physical capital, best defines financial markets.

Economists Use the Term "Financial Markets" to Mean the Markets