Which of the following does not belong in the M2 category?
(A) Currency held in bank vaults.
(B) Near money.
(C) Money market mutual funds.
(D) Deposits in savings.
Ans: (A) Currency held in bank vaults.
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Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 5%. In theoretical limit, the money supply could
A) decrease by $5 billion. B) increase by $5 billion. C) increase by $20 billion. D) decrease by $20 billion.
Suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases. Their reaction would initially shift
a. aggregate demand right. b. aggregate demand left. c. aggregate supply right. d. aggregate supply left.
Based on the U.S. historical experience with the gold standard, we can conclude that
A. the gold standard guarantees neither economic nor price stability. B. the standard guarantees economic stability but not price stability. C. the gold standard guarantees price stability but not economic stability. D. the gold standard guarantees both economic and price stability.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, an increase in unemployment may be represented by the movement from
A. B to A. B. A to C. C. C to D. D. B to D.