When Using the Money Supply Figures to Measure the Direction

question 134

Multiple Choice

When using the money supply figures to measure the direction of monetary policy during the last several decades, it is better to look at changes in the M2 money supply rather than M1 because

• A)the increase in popularity of interest-earning checking accounts in the 1980s distorted the M2 money supply but not the M1 money supply.
• B)the increase in popularity of interest-earning checking accounts in the 1980s distorted the M1 money supply but not the M2 money supply.
• C)the decrease in popularity of interest-earning checking accounts in the 1980s distorted the M1 money supply but not the M2 money supply.
• D)the decrease in popularity of interest-earning checking accounts in the 1980s distorted the M2 money supply but not the M1 money supply.

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Definitions:

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A plan to increase awareness, sales, and market share for a product or service through advertising, sales promotions, public relations, and personal selling.

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A substance used in vehicles to reduce friction, heat, and wear between mechanical components that are in contact.

Sticker

A type of adhesive label or decoration which can be attached to surfaces for informational or decorative purposes.

Nonpersonal Selling

A promotional method using advertising, sales promotions, and other mass-market approaches to sell products, as opposed to direct, face-to-face sales.