Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 27, Problem 29P
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If you take $100 out of your piggy bank at home and deposit it into your checking account, how did the value of M1 change? How did the value of M2 change as a result of your deposit?
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?
why 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?
Chapter 27 Solutions
Principles of Economics 2e
Ch. 27 - In many casinos, a person buys chips to use for...Ch. 27 - Can you name some item that is a store of value,...Ch. 27 - If you are out shopping for clothes and books,...Ch. 27 - For the following list of items, indicate If they...Ch. 27 - Explain why the money listed under assets on a...Ch. 27 - Imagine that you are in the position of buying...Ch. 27 - What are the four functions that money serves?Ch. 27 - How does the existence of money simplify the...Ch. 27 - What is the double-coincidence of wants?Ch. 27 - What components of money do we count as part of...
Ch. 27 - What components of money do we count in M2?Ch. 27 - Why do we call a bank a financial intermediary?Ch. 27 - What does a balance sheet show?Ch. 27 - What are a banks assets? What are its liabilities?Ch. 27 - How do you calculate a banks net worth?Ch. 27 - How can a bank end up with negative net worth?Ch. 27 - What is the asset-liability time mismatch that all...Ch. 27 - What is the risk if a bank does not diversify its...Ch. 27 - How do banks create money?Ch. 27 - What is the formula for the money multiplier?Ch. 27 - The Bring it Home Feature discusses the use of...Ch. 27 - Imagine that you are a barber in a world without...Ch. 27 - Explain why think the Federal Reserve Bank tracks...Ch. 27 - The total amount of U.S. currency in circulation...Ch. 27 - Explain the difference between how you would...Ch. 27 - Should banks have to hold 100 of their deposits?...Ch. 27 - Explain what will happen to the money multiplier...Ch. 27 - What do you think the Federal Reserve Bank did to...Ch. 27 - If you take 100 out of your piggy bank and deposit...Ch. 27 - A bank has deposits of 400. It holds reserves of...Ch. 27 - Humongous Bank is the only bank in the economy....
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Similar questions
- When our children were young, we saved their personal funds like cash birthday gifts in savings accounts at our local bank. These funds were counted as: A. Neither M1 nor M2 money B. M1 money but not M2 money C. M2 money but not M1 money D. Both M1 and M2 moneyarrow_forwardJohn withdraws $ 100 from his checking account and deposits it in his savings account. What will be the effect of this Transaction on different measures of money, i.e. C, M1, and M2?arrow_forwardDoes m2 , m1 or m3 include current deposit at bank ??arrow_forward
- Determine 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_forwardCalculate M2 if in the Economy is M1 is $10,000 million and Savings deposit with post office is $7700 millionarrow_forward10. Which of the following is included in M2 but not included in M1? demand deposits currency held outside banks savings accounts other checkable depositsarrow_forward
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