The Main Advantage of Using M2 Instead of M1 as the Measure

question 78

Multiple Choice

The main advantage of using M2 instead of M1 as the measure for money is that

• A) M2 can be measured more accurately.
• B) M2 includes only instantly accessible assets.
• C) M2 is sometimes more stable.
• D) M2 varies as the interest rate varies.

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Definitions:

Cash Flow Stream

A series of cash inflows and outflows over a period, representing transactions or operations' financial impacts on a business.

Compounded Annually

The process by which an investment grows in value over time as interest is added to the principal amount each year, which then earns more interest.

Rate of Interest

The percentage of a loan accrued as interest to the borrower, commonly shown as an annual percent of the remaining loan balance.

Retirement Plan

A financial arrangement designed to replace employment income upon retirement, offering benefits like savings, investment, and tax advantages.