When using the money supply figures to measure the direction of monetary policy during the last several decades, it is better to look at changes in the M2 money supply rather than M1 because
a. the increase in popularity of interest-earning checking accounts in the 1980s distorted the M2 money supply but not the M1 money supply.
b. the increase in popularity of interest-earning checking accounts in the 1980s distorted the M1 money supply but not the M2 money supply.
c. the decrease in popularity of interest-earning checking accounts in the 1980s distorted the M1 money supply but not the M2 money supply.
d. the decrease in popularity of interest-earning checking accounts in the 1980s distorted the M2 money supply but not the M1 money supply.
B
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A monetary growth rule means that
A) the Fed will raise interest rates if it thinks the economy is growing faster than potential. B) the money supply should grow at a constant rate. C) the Fed will lower interest rates if it thinks a recession is on the horizon. D) the money supply should grow in response to economic conditions.
The more sensitive people are to a change in price, the
A) greater a change in price must be to induce a certain change in quantity demanded. B) greater is the price elasticity of demand. C) smaller the price elasticity of demand. D) closer the price elasticity of demand is to one.
A firm in pure competition would shut down when:
a. price is less than average total cost b. price is less than average fixed cost c. price is less than marginal cost d. price is less than average variable cost
“Job discrimination may actually result from rational decision making on the part of firms and not because of prejudice.” Explain this statement
What will be an ideal response?