Why are checking account balances included in the M1 definition of the money supply?
a. They are a traditional form of money that pre-dates paper money.
b. They are used to make so many payments.
c. They are backed by gold and silver.
d. They pay interest.
b
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If the number of unemployed workers is 200 million, and the number in the labor force is 500 million, what is the unemployment rate?
A) 0.4% B) 4% C) 14% D) 40%
Tobin's model of the speculative demand for money shows that people can reduce their ________ by ________ their asset holdings
A) wealth; diversifying B) risk; specializing C) return; diversifying D) risk; diversifying
An increase in the marginal propensity to hold money
a. results in an fall in the interest rate and a decline in income. b. raises the interest rate and lowers income. c. results in a fall in the interest rate and a rise in income. d. raises both the interest rate and income.
The money supply will grow even larger through deposit creation when
A. People decide to use cash instead of checks for transactions. B. Interest rates rise, causing people to move money out of banks and into bonds. C. Banks stop making new loans because they are too risky. D. Consumers, businesses, and government increasing their borrowing.