Which of the Following Statements Best Summarizes the Difference Between

question 18

Multiple Choice

Which of the following statements best summarizes the difference between M-1 and M-2?

• A)The M-1 definition of the money supply considers only domestic currencies while the M-2 definition includes foreign currencies.
• B)The M-1 definition consists of "hard" currencies which are backed by gold and silver,while M-2 consists of "soft" currencies which are not backed by gold and silver.
• C)The M-2 definition includes everything in the M-1 definition,plus additional components such as money in savings accounts,money market accounts,and certificates of deposit.
• D)The M-1 money supply consists only of the currency coins and paper money)that circulates in our economy,while the M-2 includes traveler's checks and funds in demand deposits.