Why Has M2 Grown More Quickly Than M1 in Recent

question 55

Multiple Choice

Why has M2 grown more quickly than M1 in recent decades?

• A) Currency in circulation has declined.
• B) People own more shares of stock than in the past.
• C) The amount of funds in CDs and money market mutual funds shares has grown faster than currency or checking deposits.
• D) Most people use debit cards instead of checking accounts.

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Definitions:

Positive Goodwill

The excess of purchase price over the fair market value of a company's identifiable assets minus liabilities, reflecting the value of a company's brand, reputation, and other intangible assets.

Carrying Values

The recorded cost of an asset in a company's financial statements, minus any accumulated depreciation or amortization.

Proportionate Consolidation Method

An accounting technique used to combine a company's share of the assets, liabilities, income, and expenses of a jointly controlled entity on a line-by-line basis in its financial statements.

Fair Value Enterprise Method

A valuation approach determining the price a willing buyer would pay for an entire business in an orderly and open market transaction.