Economics help (financial markets) (1 Viewer)

[planino]

From leading edge textbook: "Financial markets are also the factor markets for capital in the economy"

Despite thinking over this a not-insignificant number of times, I don't get how this could be, could you guys explain it to me please?

 

[RivalryofTroll]

Financial Markets (the Financial sector to be precise) are correlated with investment in the circular flow of income.

Without investment, capital cannot be created. Capital requires investment.

I think?

 

[planino]

still don't get it

 

[OzKo]

The financial markets are a representation of where money is collated in to different pools, and then invested into capital. That capital is used by firms to generate goods & services as per the Circular Flow Model.

 

[Marc26]

Financial Markets (the Financial sector to be precise) are correlated with investment in the circular flow of income.

Without investment, capital cannot be created. Capital requires investment.

I think?

You can say this. But more detail explaining this is needed so that the notion can be understood.
Just to be sure

 

[planino]

How are financial markets factor markets though?