The M2 Definition of the Money Supply Is Based on the Concept

question 212

Multiple Choice

The M2 definition of the money supply is based on the concept that

• A) M1 is a small number and should be increased in size.
• B) many types of deposits can be used as both payments and stores of value.
• C) checking deposits are used for payments, and therefore, not part of M1.
• D) cash is not used for the majority of payments.

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Definitions:

Systematic Risk

The danger that applies to the whole market or a section of the market, which cannot be mitigated by diversifying investments.

Risk Premium

The additional return expected by an investor for taking on a higher risk compared to a risk-free asset.

Total Risk

The complete range of uncertainties including market, credit, liquidity, and operational risks that can affect the performance and valuation of investments.

Portfolio Concentration

The over-representation of a particular asset class, sector, or stock within an investment portfolio, leading to heightened risk.