Suppose on your 21st birthday, your eccentric grandmother invites you to her house, takes you into her library, removes a black velvet painting of Elvis Presley from the wall, opens a hidden safe where she removes 50 crisp $100 bills, and hands them to you as a present, claiming you are her favorite grandchild. After thanking your grandmother profusely (and helping her rehang the picture of Elvis), you proceed to your bank and deposit half of your gift in your checking account and half in your savings account. How will these transactions affect M1 and M2? How will these transactions change M1 and M2 in the short run? What about the long run?”

Suppose on your 21st birthday, your eccentric grandmother invites you to her house, takes you into her library, removes a black velvet painting of Elvis Presley from the wall, opens a hidden safe where she removes 50 crisp $100 bills, and hands them to you as a present, claiming you are her favorite grandchild. After thanking your grandmother profusely (and helping her rehang the picture of Elvis), you proceed to your bank and deposit half of your gift in your checking account and half in your savings account. How will these transactions affect M1 and M2? How will these transactions change M1 and M2 in the short run? What about the long run?”

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter16: Interest, Rent, And Profit

Section: Chapter Questions

Problem 7QP

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