"By definition, all parts of M2 are money." Is the previous statement correct or not? Explain your answer
What will be an ideal response?
The statement is incorrect. Many of the assets in M2 are money. But not all the assets are money. Some of the savings deposits, time deposits, and money market funds are not means of payment and hence are not money. But they are included in M2 because they are easily converted into money.
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If the demand for a good increases because consumer income increases, the good is a(n):
a. inferior good. b. normal good. c. necessity good. d. luxury good.
Figure 2-2
Assume that U.S. agricultural land is used either to raise cattle for beef or to grow wheat. represents the production possibility frontier for beef and wheat. Production at point H is
a.
unattainable given currently available technology and resources
b.
attainable by more fully employing already available resources
c.
attainable by using better technology which is already available
d.
attainable if beef production drops to zero
e.
attainable if all available resources are used to produce wheat