Which of the following statements accurately describes the two measures of the money supply?
A)The two measures do not move together,so they cannot be used interchangeably by policymakers.
B)The two measures' movements closely parallel each other,even on a month-to-month basis.
C)Short-run movements in the money supply are extremely reliable.
D)M2 is the narrowest measure the Fed reports.

Question

Quizplus · Accepted Answer

The two measures of the money supply, M1 and M2, do not always move together, and their movements can diverge, making them not interchangeable for policymakers.

Which of the Following Statements Accurately Describes the Two Measures