Suppose you withdraw $1,000 from your savings account and put it in your checking account. Briefly explain how this will affect M1 and M2
What will be an ideal response?
M2 will not change and M1 will rise by $1,000. Going from a savings account to checking account would raise M1, but both are part of M2, so M2 would not change.
You might also like to view...
If the labor supply curve faced by a firm is rising, the marginal factor cost curve of labor must be
A) rising and below the supply curve. B) rising and above the supply curve. C) equal to the supply curve. D) horizontal.
If U.S. interest rates are higher than the world interest rates, we would expect the U.S. dollar to appreciate
a. True b. False Indicate whether the statement is true or false
If the quantity of money supplied exceeds the quantity of money demanded, at a point in time: a. the price level in the economy will fall
b. the equilibrium interest rate will fall. c. the equilibrium interest rate will fall. d. the money demand curve will shift to the right. e. the money demand curve will shift to the left.
Consider Figure 12.3. If Becky's payoff in the second rectangle from the top were 80 instead of 60, the outcome of the game would be that:
A. both choose a high price. B. both choose a low price. C. Becky chooses a high price and David chooses a low price. D. David chooses a high price and Becky chooses a low price.