What are the components of the two most frequently cited classifications of money?
The two most frequently cited official classifications of money are M1 and M2.
M1, also known as the narrow definition of money, includes the following:
Currency: The coins and bills that circulate in an economy are known as currency. Currencies are one of the most liquid forms of money.
Traveler's checks: They are purchased from a bank or financial company, signed, and then redeemed with an additional signature when one wants to spend them.
Demand deposits: They are deposits in banks that are available upon making a cash withdrawal or writing a personal check.
M2, the broader definition of money, includes everything in the category of M1 along the following:
Savings accounts: These are bank accounts on which one can't write a check directly but from which one can easily withdraw money at an automatic teller machine or bank.
Money market funds: These are funds in which the deposits of many individual investors are pooled and safely invested in things like short-term government bonds.
Small time deposits: Also known as certificates of deposit, these are relatively small time-based deposits, amounts that the depositor has committed to leaving in the bank for a certain period of time—ranging from a few months to a few years—in exchange for a higher interest rate.
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Which of the following best describes the reason why the division of labor allows individuals and firms to specialize and produce more?
a. It reduces the need for more workers. b. It limits the need for economies of scale. c. It allows individuals and firms to focus on areas of disadvantage due to natural factors and skill levels. d. It allows individuals and firms to take advantage of economies of scale.
Which of the following can occur simultaneously?
a. An increase in the national debt and a budget surplus b. A decrease in the national debt and a balanced budget c. An unchanged national debt and a budget deficit d. Positive national debt and a budget surplus e. A decreasing national debt and a budget deficit
Which of the following increases the speed at which a cartel's power erodes?
A. The share of the cartel in the world market increases. B. The price elasticity of competing supplies decreases. C. The cartel agreement is more stringent in imposing penalties on the members who cheat. D. The product's price elasticity of demand increases.
The perfectly competitive firm's demand curve has
A. a slope of infinity. B. a positive slope. C. a negative slope. D. a slope of 0.