The Components of M2 That Are Not Also in M1

question 57

Multiple Choice

The components of M2 that are not also in M1:

• A)sum to an amount that is smaller than the sum of the components of M1.
• B)pay lower rates of interest than do the components of M1.
• C)are not usable for making payments.
• D)are usable for making payments, but at a greater cost or inconvenience than currency or checks.M2 is a broader measure of money than M1, thus it contains assets that are less liquid than M1.

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Definitions:

Lease Obligations

Financial commitments a company incurs as a result of entering into a lease agreement for property, plant, or equipment.

Lessee

A person or entity that leases an asset from another party, known as the lessor.

Flexibility

The ability of an entity or system to adapt to changes, variability, or uncertainties in its operational environment.

Indirect Interest Costs

Expenses related to obtaining financing (such as legal, administrative, and underwriting fees) that do not directly involve the payment of interest.