Why are the following included in the broader definition of supply known as M2?
(a) money market deposit accounts
(b) money market mutual funds
(c) savings accounts
What will be an ideal response?
(a) Money market deposit accounts: They allow their owners to write only a few checks per month but pay market-determined interest rates.(b) Money market mutual funds: Owners of shares in money market mutual funds can withdraw their funds by writing checks. Thus, depositors can use their holdings of fund shares just like checking accounts.(c) Savings accounts: Modern banking procedures have blurred the distinction between checking balances and savings balances. For example, most banks these days offer convenient electronic transfers of funds from one account to another, either by telephone or by pushing a button on an automated teller. Consequently, savings balances can become checkable almost instantly. For this reason, savings accounts are included—along with money market deposit accounts and money market mutual fund shares—in the broader definition of the money supply known as M2.
You might also like to view...
Several firms want to be the only horse carriage service in a small tourist town and must pay the city for a license to operate as a monopoly. Competition among the potential firms will result in
A) bidding up the price of the license so that the winning firm makes $0 economic profit. B) the winning firm making an economic profit because it will be a price maker. C) the winning firm making an economic profit because it will have no competition. D) the winning firm making an economic profit because rent seeking cannot occur. E) a $0 economic profit because monopolies are illegal.
Explain how a mortgage lender may act differently if it intends to resell mortgages in secondary markets instead of holding the mortgages itself
What will be an ideal response?
If two indifference curves cross, all points on both curves would yield an equal level of utility, which would violate the "more is better" property
a. True b. False Indicate whether the statement is true or false
Explain how the nominal wage rate is converted into the real wage rate. Explain why this process of conversion changes the nominal wage rate into the real wage rate
What will be an ideal response?