Changes in M1 and M2.

Question

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Answer 1

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 12, Problem 1VQP

To determine

Changes in M1 and M2.

Expert Solution & Answer

Explanation of Solution

M1 and M2 indicate the money supply in the economy. The M1 category involves currency held in hand checkable deposits and traveler’s checks. The M2 category involves all M1 category money supply plus saving deposit, time deposit, and money market mutual fund. Thus, if $4 million is transferred to checkable deposit, the M1 money supply will fall, but at same time, the M2 category money supply will remain the same, that means, $4 million deposit does not make any changes in M1.

Economics Concept Introduction

Money supply: Money supply refers total stock of money circulated in the economy.

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Answer 2

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 12, Problem 1VQP

To determine

Changes in M1 and M2.

Expert Solution & Answer

Explanation of Solution

M1 and M2 indicate the money supply in the economy. The M1 category involves currency held in hand checkable deposits and traveler’s checks. The M2 category involves all M1 category money supply plus saving deposit, time deposit, and money market mutual fund. Thus, if $4 million is transferred to checkable deposit, the M1 money supply will fall, but at same time, the M2 category money supply will remain the same, that means, $4 million deposit does not make any changes in M1.

Economics Concept Introduction

Money supply: Money supply refers total stock of money circulated in the economy.

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Answer 3

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 12, Problem 1VQP

To determine

Changes in M1 and M2.

Expert Solution & Answer

Explanation of Solution

M1 and M2 indicate the money supply in the economy. The M1 category involves currency held in hand checkable deposits and traveler’s checks. The M2 category involves all M1 category money supply plus saving deposit, time deposit, and money market mutual fund. Thus, if $4 million is transferred to checkable deposit, the M1 money supply will fall, but at same time, the M2 category money supply will remain the same, that means, $4 million deposit does not make any changes in M1.

Economics Concept Introduction

Money supply: Money supply refers total stock of money circulated in the economy.

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Answer 4

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 12, Problem 1VQP

To determine

Changes in M1 and M2.

Expert Solution & Answer

Explanation of Solution

M1 and M2 indicate the money supply in the economy. The M1 category involves currency held in hand checkable deposits and traveler’s checks. The M2 category involves all M1 category money supply plus saving deposit, time deposit, and money market mutual fund. Thus, if $4 million is transferred to checkable deposit, the M1 money supply will fall, but at same time, the M2 category money supply will remain the same, that means, $4 million deposit does not make any changes in M1.

Economics Concept Introduction

Money supply: Money supply refers total stock of money circulated in the economy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 1VQP

To determine

Changes in M1 and M2.

Expert Solution & Answer

Explanation of Solution

M1 and M2 indicate the money supply in the economy. The M1 category involves currency held in hand checkable deposits and traveler’s checks. The M2 category involves all M1 category money supply plus saving deposit, time deposit, and money market mutual fund. Thus, if $4 million is transferred to checkable deposit, the M1 money supply will fall, but at same time, the M2 category money supply will remain the same, that means, $4 million deposit does not make any changes in M1.

Economics Concept Introduction

Money supply: Money supply refers total stock of money circulated in the economy.

Answer 6

Chapter 12, Problem 1VQP

To determine

Changes in M1 and M2.

Expert Solution & Answer

Explanation of Solution

M1 and M2 indicate the money supply in the economy. The M1 category involves currency held in hand checkable deposits and traveler’s checks. The M2 category involves all M1 category money supply plus saving deposit, time deposit, and money market mutual fund. Thus, if $4 million is transferred to checkable deposit, the M1 money supply will fall, but at same time, the M2 category money supply will remain the same, that means, $4 million deposit does not make any changes in M1.

Economics Concept Introduction

Money supply: Money supply refers total stock of money circulated in the economy.

Answer 7

Chapter 12, Problem 1VQP

To determine

Changes in M1 and M2.

Answer 8

Expert Solution & Answer

Explanation of Solution

M1 and M2 indicate the money supply in the economy. The M1 category involves currency held in hand checkable deposits and traveler’s checks. The M2 category involves all M1 category money supply plus saving deposit, time deposit, and money market mutual fund. Thus, if $4 million is transferred to checkable deposit, the M1 money supply will fall, but at same time, the M2 category money supply will remain the same, that means, $4 million deposit does not make any changes in M1.