Why is there more than one definition of the money supply? What is the difference between them?
There is no one "correct" definition of the money supply because there is no clear distinction between money and "near money." M1 focuses on money's role as a medium of exchange. M2 and M3 include other assets that can be readily converted into the medium of exchange. The more inclusive the definitions, the less liquid the assets that are counted.
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Refer to the diagrams, in which AD 1 and AS 1 are the "before" curves and AD 2 and AS 2 are the "after" curves. Other things equal, a decline in productivity is depicted by:
A. panel (A) only.
B. panel (B) only.
C. panel (C) only.
D. panels (B) and (C).
The number of U.S. households with access to the Internet has grown is growing rapidly. Compared to 50 years ago, one would predict that when considering a major purchase, people today will gather:
A. more information because the Internet has lowered the cost of gathering information. B. less information because the Internet has increased the benefit of gathering information. C. less information because the Internet has lowered the cost of gathering information. D. more information because the Internet has increased the cost of gathering information.