MGT 411 GDB #1

1

.What is the main characteristic that distinguishes the different money aggregate definitions?

Solution:

The main characteristic that distinguishes the different money aggregate definitions is the Liquidity.

2.Which money aggregate definition is mostly used in economic decision around the world?

Solution:

M2 is used in economic decisions.

3. Justify answer given against part-b.

(provide only one reason)

 Solution:

Economists use M2 when looking to quantify the amount of money in circulation and trying to explain different economic monetary conditions. M2 is a key economic indicator used to forecast inflation .