13. Rashad and Brianna decide to go on a vacation. As a result, they withdraw $5,000 from their savings account to purchase $5,000 worth of traveler's checks. As a result of these changes, a. M1 increases by $5,000 and M2 decreases by $5,000. b. M1 increases by $5,000 and M2 stays the same. c. M1 and M2 stay the same. d. M1 decreases by $5,000 and M2 increases by $5,000.

13. Rashad and Brianna decide to go on a vacation. As a result, they withdraw $5,000 from their savings account to purchase $5,000 worth of traveler's checks. As a result of these changes, a. M1 increases by $5,000 and M2 decreases by $5,000. b. M1 increases by $5,000 and M2 stays the same. c. M1 and M2 stay the same. d. M1 decreases by $5,000 and M2 increases by $5,000.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: The Monetary System

Section: Chapter Questions

Problem 1PA

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2 ill makes a deposit into her savings account at the local bank with $100 in cash. As a result of this transaction, A. M1 will decrease by $100. B. both M1 and M2 will increase by $100. C. M2 will increase by $100. D. Both B and C are correct.
QUESTIONS 1 Jane Doe has the following assets: $100 in her wallet $800 in her demand deposit account $1,000 in her savings account A $50 traveler’s check from her last trip to China A $300 outstanding credit card bill A car worth $5,000 A house worth $200,000 Identify which of the assets are included in M1, which are in M2, or neither M1 nor M2. ii) Suppose she takes $400 for her demand deposit account and deposits it in her savings account. What is the change in M1 and M2? b) Many savers choose to hold their funds at a financial intermediary instead of lending them directly in financial markets. Explain TWO (2) reasons why financial…
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