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market clearing

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The process of moving to a position where the quantity supplied is equal to the quantity demanded, or the assumption that economic forces always ensure the equality of supply and demand. The process of market clearing involves price adjustment until a market-clearing price is achieved. In some financial markets there is a market-maker who intermediates between the supply and demand to ensure that trades can always be made. Market clearing is closely connected with the concept of market equilibrium.

Subjects: Social sciencesEconomics

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