Which of the Following Counts as Part of M1

question 245

Multiple Choice

Which of the following counts as part of M1?

• A)$5,000 worth of gold
• B)$5,000 worth of government bonds
• C)$5,000 in a checking account
• D)$5,000 credit line on a credit card
• E)$5,000 of real estate

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Definitions:

Physical Capital

The stock of tangible, non-financial assets that are used in the production of goods and services, such as machinery and buildings.

Opportunity Costs

The cost of an alternative that must be forgone in order to pursue a certain action, essentially what is sacrificed to choose one option over another.

Subsidies

Financial support provided by governments to individuals, organizations, or industries to encourage certain activities or reduce costs.

Comparative Advantage

The ability of an individual or country to produce a particular good or service at a lower opportunity cost than its competitors.