One conceptual problem in assigning assets to M1, M2, etc.is
A)distinguishing money from "near monies."
B)the problem of measuring asset size.
C)the need to agree on a unit of account.
D)the different size of financial assets.

Question

One conceptual problem in assigning assets to M1, M2, etc.is
A)distinguishing money from "near monies." 
B)the problem of measuring asset size.
C)the need to agree on a unit of account.
D)the different size of financial assets.

Quizplus · Accepted Answer

The conceptual problem in assigning assets to M1, M2, etc. is mainly in distinguishing money from "near monies," such as savings accounts or time deposits, which could easily be used as a medium of exchange but have some limitations in their liquidity. Other issues such as measuring asset size, agreeing on a unit of account, and different sizes of financial assets are not as relevant to this specific issue.

One Conceptual Problem in Assigning Assets to M1, M2, Etc