Comparing M1 and M2 We Know That

question 321

Multiple Choice

Comparing M1 and M2 we know that

• A) M1 is larger because it contains currency.
• B) M2 is approximately equal to M1.
• C) M2 is larger because it contains M1 and other assets.
• D) M2 is larger because it contains more liquid assets than does M1.

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Definitions:

Revenue Account

An account that tracks the income generated from the sale of goods or services before any expenses are subtracted.

Asset Account

An account on a company's balance sheet that represents tangible or intangible items of value owned by the company.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or equity account. It is positioned on the left in an accounting entry.

Credit

An accounting entry that increases a liability or equity account or decreases an asset or expense account, reflecting the opposite of a debit.