The Difference Between M1 and M2 Is Significant

question 159

Multiple Choice

The difference between M1 and M2 is significant. Which of the following best describes the difference?

• A)​M1 is nearly three times as large as M2.
• B)​M2 is made up mostly of demand and checkable deposits.
• C)​M2 is substantially larger than M1.
• D)​None of the above.

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Definitions:

Binding Price Floor

A government-imposed price control or limit on how low a price can be charged that is above the equilibrium price, leading to surplus.

Consumer Surplus

The discrepancy in the total sum consumers are willing to offer for a good or service compared to what they actually offer.

Producer Surplus

The difference between the amount producers are willing and able to supply a good for and the amount they actually receive.

Market Price

The amount of money a buyer pays and a seller receives for a product or service in a competitive marketplace.