If many people were to suddenly deposit into their checking accounts large sums of cash previously held in their homes and/or wallets, and there were no offsetting actions by the Fed or change in institutional policies, this would
a. decrease the M1 money supply but increase the M2 money supply.
b. increase the excess reserves of banks and expand the money supply if these reserves are used to make additional loans.
c. reduce the excess reserves of banks and indirectly decrease the M1 money supply.
d. reduce the excess reserves of banks and indirectly increase the M1 money supply.
B
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A country that joins an exchange rate area
A) gives up its ability to use the exchange rate for the purpose of stabilizing output and employment. B) does not give up its ability to use the exchange rate and monetary policy for the purpose of stabilizing output and employment. C) gives up its ability to use the exchange rate and monetary policy for the purpose of stabilizing output and employment. D) gives up its ability to use only monetary policy for the purpose of stabilizing output and employment. E) does not gives up its ability to use only monetary policy for the purpose of stabilizing output and employment.
When there are just a few firms in the industry, the industry structure is most likely to be:
A. a perfectly competitive industry. B. an oligopoly market. C. a monopoly market. D. a natural monopoly market.
Which would best explain a decrease in both the price and the quantity of a product over a period of time?
A. A decrease in people's incomes, and the product is an inferior good B. A long strike by workers who make the product C. A decrease in the price of a substitute good D. A technological improvement in production methods
Figure 14.6 represents the market for health insurance. Suppose there are two types of consumers, low-cost consumers with $2,000 average medical expenses per year, and high-cost customers with $4,000 average medical expenses per year. If the insurance companies are pessimistic and set their price according to their pessimistic expectations:
A. the companies' pessimism is not justified. B. the market will include some low-cost and some high-cost customers. C. the market will include only low-cost customers. D. the market will include only high-cost customers.