Suppose you decide to move $2000 from your checking account and move it to your savings account. What is the overall effect on M1 and M2?
A. M1 is unchanged, M2 falls by $2000.
B. M1 declines by $2000, M2 is unchanged.
C. M1 declines by $2000, M2 rises by $2000.
D. M1 is unchanged, M2 is unchanged.
Answer: B
You might also like to view...
A money supply increase in the New Keynesian model is not neutral because
A) consumers are fooled into working harder. B) the real interest falls, the quantity of output demanded rises, and firms supply more output. C) productivity rises, increasing output supply. D) bank lending rises.
Using the above table, what is the opportunity cost of moving from alternative C to alternative D?
A) 60 loaves of bread B) 2 loaves of bread C) 30 loaves of bread D) 1/2 loaf of bread
A factual claim about how the world actually works is a ______________ statement.
A. positive B. marginal C. irrational D. normative
Which of the following is true?
a. Inflation and unemployment rates can both increase in the short run in response to negative supply shocks. b. Inflation and unemployment rates cannot both decrease in the short run in response to reduced aggregate demand. c. Inflation and unemployment rates can both decrease in the short run in response to positive supply shocks. d. All of the above are true.