What will happen to the sizes of the M1 money supply and the M2 money supply if the following transactions take place?
a. Tasha withdraws $3,000 from her checking account and holds it as currency.
b. Arturo withdraws $3,000 from his savings account and deposits it in his checking account.
c. Benjamin withdraws 3,000 from his savings account and puts it in a certificate of deposit (CD).
d. Marisol withdraws $3,000 from her home safe and deposits it in her savings account.
a. no change to M1 and no change to M2
b. M1 increases by $3,000; no change to M2
c. no change to M1 and no change to M2
d. M1 decreases by $3,000; no change to M2
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Consider an income tax and a head tax, the sizes of which have been set so that the government collects the same amount of money under each tax. Which tax does the consumer prefer?
a. The consumer is indifferent between the two taxes, since he pays the same amount of money under each tax.
b. The consumer prefers the head tax, because it does not lower the relative wage as does the income tax.
c. The consumer prefers the income tax, because it can be avoided by increasing the amount of leisure time consumed.
d. The consumer may prefer either tax, depending on whether the income tax increases or decreases the number of hours of work at the optimum.
Quantitative easing is likely to lead to a(n) ________
A) increase in unemployment rate B) decrease in the price level C) increase in the federal funds rate D) decrease in the federal funds rate
An import quota for sugar results in an increase in
A) the domestic market price of sugar. B) the domestic demand for sugar. C) the domestic market supply of sugar. D) sugar imports.
Production is the process by which
A. resources are transformed into useful forms. B. resources are allocated and distributed. C. products are used by consumers. D. products are converted into capital.