Describe the circumstances under which the M1 money supply could fall while the M2 money supply remains constant at the same time
In order for the M1 money supply to fall, one of the components of M1 (checkable deposits, currency held outside banks, or traveler's checks) would have to decline. M2 would remain constant as long as the money that was deducted from M1 was deposited into one of the additional components of M2 (savings deposits, small-denomination time deposits, or retail money market mutual funds).
You might also like to view...
If Happy Cows, a milk producer, purchases a dairy farm, this is an example of _______
A) backward integration B) forward integration C) divestiture D) outsourcing
Which of the following statements is correct?
I. If other factors are held constant, the level of employment in the economy determines real Gross Domestic Product (GDP). II. According to classical economists, only voluntary unemployment exists in the long run. A) I only B) II only C) Both I and II D) Neither I nor II
One way DeBeers managed to maintain control over the diamond industry was to:
A. continue to be the sole diamond producer by buying all existing diamonds. B. create the illusion of no close substitutes through marketing. C. punish consumers who sought to store their wealth in diamonds. D. All of these statements are true.
Constant returns to scale cause the long-run average cost curve to be:
a. horizontal. b. vertical. c. upward-sloping. d. downward-sloping.