The Distinction Between M1 and M2 Has Blurred Over Time

question 106

Multiple Choice

The distinction between M1 and M2 has blurred over time because

• A)M1 is now larger than M2
• B)depositors can transfer funds between accounts so easily
• C)the Federal Reserve has defined them less precisely
• D)M1 is becoming less liquid
• E)banks are offering time deposits

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Definitions:

Pleasure Principle

A psychoanalytic concept suggesting that individuals seek immediate gratification of needs and desires to experience pleasure and avoid pain.

Collective Unconscious

A concept in Jungian psychology referring to part of the unconscious mind shared among beings of the same species, containing universal experiences and archetypes.

Superego

The part of the personality in Freudian psychoanalysis that represents internalized ideals and provides standards for judgment.

Ego

In psychoanalytic theory, the part of the psyche that balances the desires of the id and the morals of the superego, operating on the reality principle.