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 .
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