Author Question: What are the official measures of money? Are all the measures really money? What will be an ideal ... (Read 82 times)

xclash · **on:** Jun 29, 2018

What are the official measures of money? Are all the measures really money?

What will be an ideal response?

Question 2

According to its advocates, what are four advantages product differentiation and advertising provide to consumers?

What will be an ideal response?

karlss · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The official measures of money are M1 (the sum of currency, traveler's checks, and checking deposits owned by individuals and businesses) and M2 (the sum of M1, savings deposits, time deposits, and money market mutual funds and other deposits). All of the components of M1 are truly money because all the components serve as a means of payment. Some of the components of M2 are not truly money because they are not a means of payment. (For instance, funds at money market mutual funds cannot be used as a means of payment for small purchases.) But all of these non-money assets are highly liquid so they are operationally similar to money.

Answer to Question 2

Product differentiation satisfies the vast range of consumer tastes and preferences, ensuring high quality and efficient production. Advertising provides valuable information to consumers to make decisions.