Money Supply: (A) Policies impacting money supply are called Monetary Policy (B)

Question

Money Supply: (A) Policies impacting money supply are called Monetary Policy (B) M1 and M2 are two definitions (C) M1 measure is smaller than M2 measure (D) The largest component is Savings Accounts (E) All of the above (F) A, B and C Money Supply: (A) Policies impacting money supply are called Monetary Policy (B) M1 and M2 are two definitions (C) M1 measure is smaller than M2 measure (D) The largest component is Savings Accounts (E) All of the above (F) A, B and C Money Supply: (A) Policies impacting money supply are called Monetary Policy (B) M1 and M2 are two definitions (C) M1 measure is smaller than M2 measure (D) The largest component is Savings Accounts (E) All of the above (F) A, B and C

Explanation / Answer

Correct option is (F).

The policy aiming at increase or decrease of money supply is a monetary policy. Two definitions of money stock are M1 and M2, where M2 is M1 plus savings account and money market mutual funds. So M1 is lower than M2.

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