M1 Differs from M2 Because ________

question 10

Multiple Choice

M1 differs from M2 because ________.

• A)M1 includes demand deposits and M2 does not
• B)M1 includes currency held by the nonbank public and M2 includes only currency held by banks
• C)M2 includes interest bearing time deposit accounts and M1 does not
• D)all of the above
• E)none of the above

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Definitions:

Margin

Typically refers to the difference between the selling price of a product and its cost, used to measure profitability.

Turnover

The rate at which inventory or assets are sold and replaced or the rate at which employees are replaced in a business.

Residual Income

The amount of income that an investment or project generates above the minimum rate of return.

Residual Income

The profit left over after all necessary capital expenses are subtracted from the operating income, serving as an indicator of financial success.