Which of the Following Statements Is True

question 48

Multiple Choice

Which of the following statements is true?

• A) Advancements in statistical methods and data collection have made it possible for the Fed to closely link the changes in the rate of growth in M1 and M2 with changes in the rate of growth of GDP.
• B) The introduction of new financial products and changes in the ways people pay for transactions have blurred the distinction between M1 and M2 so that the Fed no longer has reliable estimates of the money demand curve.
• C) With the proliferation of new financial products, the close relationship between M1 growth and output growth has been further strengthened.
• D) Unlike the demand for M1, the demand for the much broader M2 money aggregate is unaffected by the financial innovation in interest bearing checking deposits.

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Definitions:

Spinoff

A type of corporate restructuring in which a company divides itself into two or more independently operated businesses, one being separated from the parent organization.

Hostile Takeovers

Acquisition attempts opposed by the management or board of the target company, often through public offer to shareholders or proxy fight.

Stockholders

Individuals or entities that own one or more shares of stock in a corporation, making them partial owners of the company.

After Tax Cash Flows

The amount of net cash flow available after taxes have been deducted.