What is larger: M1 or M2? Why? What will be an ideal ...

[rl]

What is larger: M1 or M2? Why?
 
  What will be an ideal response?

Question 2

According to this Application, during the late 1980s, Argentina pegged its currency to the U.S. dollar. When the dollar appreciated sharply on world markets after 1995, this caused a large trade deficit in Argentina because
 
  A) Argentina could no longer afford to purchase as many imported products.
  B) Argentinean exports grew relative to the nation's imports.
  C) U.S. exports to Argentina declined.
  D) Argentinean exports became relatively more expensive in global markets.

[tashiedavis420]

Answer to Question 1

M2 is larger than M1. M2 includes M1 plus additional assets, so M2 must be larger than M1. In June, 2011, M1 was approximately 1,950 billion and M2 was about 5 times larger at approximately 9,100 billion.

Answer to Question 2

D

[rl]

Thank you

[tashiedavis420]

Happy to help you