The Difference Between M1 and M2 Is Given by Which

question 11

Multiple Choice

The difference between M1 and M2 is given by which of the following?

• A) M1 includes currency, coins, gold and silver, whereas M2 does not contain gold and silver.
• B) M1 is made up of currency, traveler's checks, and money in checkable accounts, whereas M2 contains M1 plus savings deposits and time deposits.
• C) M1 is limited to currency, whereas M2 contains M1 plus traveler's checks and money in checkable accounts.
• D) M1 includes currency and traveler's checks, whereas M2 contains M1 plus money in checking accounts.

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Definitions:

Homogeneous Product

Goods that are perfectly identical in quality, style, and substance, making them indistinguishable from products produced by competing companies.

Kinked Demand Curve Model

A model in oligopoly markets suggesting that firms may not change their prices because an increase could be ignored by rivals, while a decrease might be matched.

Price Stability

A situation in an economy where prices in general do not change significantly over time, minimizing uncertainty and conducive to economic growth.

Oligopolies

Market structures characterized by a small number of firms that have significant market power, which can influence prices and output levels.