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Explain the Differences Between the Two Money Measures, M1 and M2

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Essay

Explain the differences between the two money measures, M1 and M2. Why are checks, debit cards, and credit cards not considered to be money?


Definitions:

Operating Income

Earnings before interest and taxes (EBIT), a measure of a company's profit generated from its core operations excluding the effects of financing and taxes.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, due to fixed costs within a company's operating structure.

Variable Costs

Charges that shift in alignment with the volume of business activity.

Operating Income

Income generated from a company's primary business operations, excluding revenue from investments and other non-operational sources.

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