Suppose your bank raises its minimum-balance requirement for free checking on checking accounts by $500. You take $500 out of your passbook savings account and put it in your checking account. What is the overall effect on M1 and M2?
A) M1 rises by $500, M2 falls by $500.
B) M1 is unchanged, M2 is unchanged.
C) M1 rises by $500, M2 is unchanged.
D) M1 is unchanged, M2 falls by $500.
C
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Select whether the statement is true or false. A. True B. False
Suppose the economy of Catalania is experiencing a recession and policy makers decide to implement an expansionary monetary policy. After the implementation of the policy, there is a considerable time gap before the effect of the policy on the major economic variables is noticed. This is an example of: a. the neutrality of money. b. an inflationary gap
c. an administrative lag. d. an operational lag.
Although popular opinion frequently portrays trade deficits (actually, account deficits) as "bad," can you present economic reasons why a trade deficit might be considered "good"?
Refer to Table 4.1. Mike's preferences are consistent with the More-Is-Better Principle because:
A. the two goods are perfect substitutes.
B. there are no empty cells.
C. in each column, the choices at the top are ranked lower than the choices at the bottom.