Suppose you withdraw $1,000 from your savings account and put it in your checking account. 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. Going from a savings account to checking account would raise M1, but both are part of M2, so M2 would not change.
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Please define and give an example of sterilized foreign exchange intervention
What will be an ideal response?
The special privileges and obligations of corporations are defined by law
a. True b. False Indicate whether the statement is true or false
The banking system currently has $200 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 4 percent. If the Fed raises the reserve requirement to 10 percent and at the same time buys $50 billion worth of bonds, then by how much does the money supply change?
a. It rises by $600 billion. b. It rises by $125 billion. c. It falls by $2,500 billion. d. None of the above is correct.
In an advertisement for credit cards, the statement is made, "Think of a credit card as smart money." An economist's reaction to this would be that a credit card is:
A. dumb money. B. simply money. C. actually better than money. D. not money.