MGT411 - Money & Banking 1st GDB

Semester “Spring 2011”
“Money & Banking MGT(411)”
This is to inform that Graded Discussion Board (GDB)
will be opened according to the following schedule
Schedule
Opening Date and Time
April 11, 2011 At 12:01 A.M. (Mid-Night)
Closing Date and Time
April 13, 2011 At 11:59 P.M. (Mid-Night)
Topic/Area for Discussion
“Monetary Aggregate ”
Note: The discussion question will be from the area/topic mentioned above. So start learning about the topic now.

Discussion Question
Money Aggregate or money supply plays a crucial role in any economy, which not only counts the money supply at specific time period but also useful in taking different economic decisions. Definitions of different money aggregate are some how loosely defined but all the economists differentiate and classify M1, M2 & M3 on the single accepted base.

Required
Sr.
Question
Answer (Write keywords only)
a)
What is the main characteristics that distinguish the different money aggregate definitions?
b)
Which money aggregate definition is mostly used in economic decision around the world?
c)
Justify answer given against part-b.
(provide only one reason)

help me plz[You must be registered and logged in to see this image.]

Discussion Question
Money Aggregate or money supply plays a crucial role in any economy, which not only counts the money supply at specific time period but also useful in taking different economic decisions. Definitions of different money aggregate are some how loosely defined but all the economists differentiate and classify M1, M2 & M3 on the single accepted base.

1.What is the main characteristic that distinguishes the different money aggregate definitions?
Solution:
Ans: 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:
Ans: M2 is used in economic decisions.
3. Justify answer given against part-b.
(provide only one reason)
Solution:
Ans: 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 . [You must be registered and logged in to see this image.]