Describe the differences between M1 and M2
M1 is the narrow definition of the money supply. It only includes money that can be directly used for everyday transactions. M1 consists of traveler's checks, checkable deposits, and currency held outside banks. M2 is the broad definition of the money supply. M2 is made up of M1 plus savings deposits, small-denomination time deposits, and retail money market mutual funds.
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The table above shows the marginal costs and marginal benefits of college education. If 20 million students are enrolled, the marginal external benefit is
A) zero. B) $4,000. C) $5,000. D) $7,000.
The law of large numbers:
A) can be used to explain why some people are risk averse and others are risk neutral or risk loving. B) can be used to explain why some people choose to self-insure against random, single and largely unpredictable events. C) states that large amounts of information are often preferred to small amounts of information. D) states that the average outcome of a large number of similar events can often be predicted.