EBK EXPLORING MACROECONOMICS
7th Edition
ISBN: 9780100546400
Author: Sexton
Publisher: YUZU
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Question
Chapter 17, Problem 9P
To determine
To explain:
The changes in M1 and M2 due to the given situations.
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What is the difference between M1 and M2? Why aren’t M1 and M2 just combined?
You sell $10,000 of money market mutual fund shares and deposit them in a checking account with a bank. What is the effect on M1 and M2?
If you are out shopping for clothes and books, what is easiest and most convenient for you to spend: M1 or M2? Explain your answer.
Chapter 17 Solutions
EBK EXPLORING MACROECONOMICS
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- Define M1 and M2. Which is bigger? Iarrow_forwardDetermine whether each of the following is included in both M1 and M2 or M2 only: a. a Connecticut quarter b. a savings account at a local savings bank c. a share draft account at a credit union d. money market deposit accounts e. American Express travelers’ checksarrow_forwardwhy does m2 fall and not remain unchanged? doesn't M2 consist of both M1 and M2? so when M1 rise (due to more cash), savings account (which is under M2) will drop by the same amount as M1 rise, hence overall M2 will remain unchanged?arrow_forward
- Suppose you transfer $2,000 from your mutual fund account to your checking account. What is the immediate impact of this transfer on M1 and M2?arrow_forwardWhy (not how) did money evolve out of a barter economy?arrow_forwardJohn Antonio transfers $5000 from his checking account to his savings account. How are M1 and M2 affected by this decision? a.M1 increases and M2 decreases b.M1 and M2 remain the same c.M1 decreases and M1 increases d.M1 increases and M2 increases e.M1 decreases and M2 decreasesarrow_forward
- Which of the following is included in M2, but not included in M1? Group of answer choices travelers checks demand deposits currency held outside banks savings accountsarrow_forwardThere are some possible explanation for m2>m1 . But, Phillip Cagan defended that m1>m2 situation might arise. Would you please explain what the factors may have role in this?arrow_forwardIf traveler’s checks were $500 higher and saving deposits were $1,000 higher, M1 would be?arrow_forward
- Is barter becoming more or less prevalent in the US economy? Why?arrow_forwardAli transfers 1000 dollars from his checking account to his savings account. This transactionwilla) decrease both M1 and M2.b) not change M1 and decrease M2.c) decrease M1 and not change M2.d) increase both M1 and M2.arrow_forwardCompare and contrast the M1 and M2money supplies.arrow_forward
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