Question

Explain the distinction between a real transaction and a financial transaction (giving examples of each) and explain why for most real transactions, there is a financial transaction that mirrors it.

Answer 1

Real transaction is when there is actual exchange of goods. Let suppose you go to a shop and you purchase some milk. For that you will have to make a payment. That payment is the financial transaction. Here the money is the mirror of financial transaction.

Financial transaction are those transactions in which their is no exchange of goods or services. Money is just a means to achieve it. E.g. when you purchase a stock for any company, you don’t get anything g in return.