Which of the following is included in both M1 and M2?

The Ricardian equivalence theorem states that

A) spending on national defense is a direct expenditure offset. B) an increase in government spending by the federal government leads to offsetting reductions in state government spending. C) government spending financed by taxes is equivalent to government spending financed by borrowing. D) an increase in government spending financed by higher taxes has no effect on aggregate demand.

In the language of economics, which of the following would be defined as investment?

a. The purchase of a U.S. savings bond b. The purchase of 100 shares of Ford Motor Company stock c. The deposit of $1,000 into a savings account d. The purchase of $500 worth of gold e. The accumulation of inventories by a firm