An Increase in the Circulation of Currency Would

question 30

Multiple Choice

An increase in the circulation of currency would:

• A)increase both M1 and M2.
• B)not change M1 but increase M2.
• C)decrease both M1 and M2.
• D)not change M1 or M2.
• E)decrease M1 and not change M2.

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Definitions:

Operating Activities

Activities that are directly related to the running of a business and the production of its goods and services, affecting the company's cash flow.

Direct Method

In financial accounting, refers to a way of allocating service department costs directly to producing departments without intermediate allocations.

Cash Basis

A bookkeeping practice in which income and outgoings are documented at the point of actual transaction, instead of when they are accrued.

Investing Activities

Transactions involving the purchase or sale of long-term assets and investments not related to the entity's primary business operations.