Interest May Be Defined As

question 3

Multiple Choice

Interest may be defined as:

• A) A borrower's payment to the owner of an asset for its use.
• B) The future value of a present amount.
• C) Always an asset.
• D) Always a liability.
• E) Time.

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Definitions:

M2

A measure of the money supply that includes cash and checking deposits as well as near money that can be easily converted to cash, like savings deposits, money market securities, and mutual funds.

M3

An indicator of the total money supply encompassing M2—which consists of cash, checking deposits, and readily convertible near money—along with substantial time deposits, institutional money market funds, and additional significant liquid assets.

M1

A segment of the money supply encompassing all tangible forms of money such as bills and coins, alongside demand deposits and additional liquid assets maintained by the central bank.

Demand for Money Schedule

A representation of the relationship between the quantity of money people wish to hold and the interest rate, other factors being constant.