Which Statement About M2 Is Incorrect

question 6

Multiple Choice

Which statement about M2 is incorrect?

• A) M2 is a broader measure of money than M1.
• B) Small-denomination time deposits are part of M2.
• C) Near monies are more liquid than M1.
• D) Demand deposits are part of M2.

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Definitions:

Optimal Stimulation

A psychological theory proposing that individuals seek an optimal level of arousal, with too little leading to boredom and too much resulting in stress.

Arousal Theory

The theory that optimal performance and psychological arousal are related in a way that differs as a function of the individual and the task.

Yerkes-Dodson Law

A theory suggesting there is an optimal level of arousal for performance, and that too little or too much arousal can negatively affect performance.

Arousal

A physiological and psychological state of being awake or reactive to stimuli, involving changes in heart rate, brain activity, and energy levels.