Suppose you withdraw $1,000 from your savings account and put it under your mattress. Briefly explain how this will affect M1 and M2
What will be an ideal response?
M2 will not change and M1 will rise by $1,000. When under your mattress, the $1,000 would be counted as currency. Going from a savings account to currency would raise M1, but both are part of M2, so M2 would not change.
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In making decisions about what to consume, a person's goal is to
A) allocate her limited income among all the products she wishes to buy so that she receives the highest total utility. B) maximize her marginal utility from the goods and services she wishes to buy using her limited income. C) buy low-priced goods rather than high-priced goods. D) consume as many necessities as possible and then, if there is money left over, to buy luxuries.
If an up-scale jewelry maker sells its products to retailers with the explicit condition that the retailers may not resell the products below a specified price, this is an example of ________.
A) monopolization B) market division C) price fixing D) resale price maintenance
The most effective government policy for reducing poverty is to
a. reduce discrimination in the job market based on gender and race b. abandon all government programs and rely on private charity c. reduce programs that promote education and training of the poor d. dramatically increase Medicare payments to the elderly e. promote economic growth and job creation
The common currency of the Economic Monetary Union is the
a. franc. b. pound. c. euro. d. mark.