Michelle transfers $4,000 from her savings account to her checking account. What effect is this change likely to have on M1 and M2?
A. M2 increases and M1 stays the same.
B. M1 increases and M2 decreases.
C. M1 increases and M2 stays the same.
D. M1 decreases and M2 increases.
Answer: C
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Another name for a shortage is
A) excess quantity supplied. B) excess quantity demanded. C) equilibrium. D) market clearing.
In a perfectly competitive market, producers efficiently use their scarce resources to produce what consumers want and as a result they achieve: a. productive efficiency
b. allocative efficiency. c. economic efficiency. d. constant returns of scale.
Irregular fluctuations in economic activity are known as the
a. business cycle. b. broken window fallacy. c. tradeoff between inflation and unemployment. d. ten principles of economics.
The larger the marginal propensity to consume:
a. the larger will be consumers' savings. b. the more pronounced will be the impact of an expansionary fiscal policy. c. the smaller will be consumer's consumption. d. the smaller will be the spending multiplier.