If a person takes $100 from his/her piggy bank at home and puts it in his/her savings account, then M1 will ________ and M2 will ________
A) increase; increase
B) not change; increase
C) decrease; increase
D) decrease; not change
E) increase; decrease
Answer: D
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Suppose the Fed pursues a policy that leads to higher interest rates in the United States. How will this policy affect real GDP in the short run if the United States is an open economy? This policy
A) increases investment spending, consumption spending, and net exports, all of which increase GDP. B) reduces investment spending, consumption spending and net exports, all of which reduce GDP. C) reduces investment spending and consumption spending, both of which reduce GDP. Net exports rise which increases GDP. D) reduces investment spending and consumption spending, both of which reduce GDP. Net exports fall which increases GDP.
With respect to their impact on aggregate demand for the U.S. economy, which of the following represents the correct ordering of the wealth effect, interest-rate effect, and exchange-rate effect from most important to least important?
a. wealth effect, exchange-rate effect, interest-rate effect b. exchange-rate effect, interest-rate effect, wealth effect c. interest-rate effect, wealth effect, exchange-rate effect d. interest-rate effect, exchange-rate effect, wealth effect
If the index of intra-industry trade is high, products are probably ______, and costs in both nations are ______.
a. identical; different b. differentiated; similar c. identical; similar d. differentiated; different
Which of the following is an impact of increased illegal immigration on an economy?
A. The rate of inflation in the receiving country increases. B. The demand for government services like education and health care increases. C. The real wage rate of workers increases. D. The demand for labor in the receiving country declines.