Some Economists Have Proposed a New Definition of Money That

question 50

Multiple Choice

Some economists have proposed a new definition of money that would better track money demand. One such measure is the MZM or "money zero maturity." What kind of items will be included in this measure?

• A) Assets that have no maturity such as cash, checking accounts, and shares of stocks.
• B) Assets that can be converted to cash with zero penalty and securities that are issued by the U.S. government since these are virtually risk free.
• C) Any deposits that do not have specified maturity terms, just as long as these deposits are fairly liquid and are used by consumers to pay for transactions.
• D) Liquid accounts held by the public, regardless of whether they are classified as M1 or M2 and the reserves of banks that earn no interest since these could be used to create money.

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Definitions:

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