Which of the Following Statements Accurately Describes the Two Measures

question 70

Multiple Choice

Which of the following statements accurately describes the two measures of the money supply?

• A) The two measures do not move together, so they cannot be used interchangeably by policymakers.
• B) The two measures' movements closely parallel each other, even on a month-to-month basis.
• C) Short-run movements in the money supply are extremely reliable.
• D) M2 is the narrowest measure the Bank of Canada reports.

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Definitions:

United States

A nation situated in North America, made up of 50 states and one federal district, renowned for its vast economy and varied demographics.

Factors of Production

The inputs used in the production of goods or services in the process of economic activity, including land, labor, capital, and entrepreneurship.

Inputs

Resources such as labor, capital, and materials used in the production process to create an output.

Marginal Product

The additional output that is produced by adding one more unit of a specific input while holding all other inputs constant.