Q.Explain any four functions of the money market.

The money market's functions revolve around keeping short-term liquidity flowing smoothly for every kind of participant in the economy.

1. Provides short-term liquidity to businesses and government — a company or the Government of India facing a temporary cash shortfall can raise short-term funds (via commercial paper, commercial bills, or T-Bills respectively) without disturbing its long-term capital structure.
2. Helps RBI implement monetary policy — RBI uses repo/reverse repo operations within the money market to inject or absorb liquidity, transmitting its monetary-policy stance into the wider economy.
3. Helps banks manage day-to-day liquidity — through the call money market, a bank short of funds on a given day can borrow overnight from another bank with a temporary surplus.
4. Equilibrates demand and supply of short-term funds — it brings together those with temporary surplus cash and those with a temporary shortage, so short-term funds flow to where they are needed instead of remaining idle.

Confusing the money market's function of financing WORKING CAPITAL (short-term needs) with the capital market's function of financing FIXED CAPITAL (long-term expansion) — these are functionally distinct markets.