Final answer:
Exchange markets are characterized as market-based, where transactions are facilitated through institutions like the New York Stock Exchange and the foreign exchange market, driven by supply, demand, and self-interest.
Step-by-step explanation:
Exchange markets are considered market-based style markets. In these markets, such as the New York Stock Exchange, buyers and sellers are brought together to transact, with businesses supplying goods and services based on demand. Participants in markets like the foreign exchange market, for example, do not seek each other out directly but instead conduct transactions through financial institutions on various levels.
The nature of market transactions is that they are quick and the participants walk away with no continuous obligations. However, without reciprocity, these transactions are driven by self-interest and can sometimes undermine cooperation and social well-being. An economy driven by market forces supports incomes based on the societal value of the resources converted by an individual, such as labor.