Question

A broader approach to measuring money defines the​ M2+ money supply​ as: A. M1 plus personal...

A broader approach to measuring money defines the​ M2+ money supply​ as:

A.

M1 plus personal savings and nonpersonal notice deposits.

B.

M1 plus near monies and deposits held at near banks.

C.

Personal savings and nonpersonal notice deposits.

D.

Currency plus chequable deposits.

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Homework Answers

Answer #1

The correct answer is Option (A) M1 plus personal savings and nonpersonal notice deposits.

Explanation -

Option (C) and Option (D) are incorrect as M2 is always includes M1 and other money than M1.

Where, M1 = All Coins & Currency in Circulation + Value of Checking Account at Banks + Value of Traveler's Checks

On the other hand, M2 is more broader money and includes M1 plus personal savings and non-personal notice deposits. In addition, M2 also includes non-institutional money market funds.

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