Suppose you have $2000 in currency in a shoebox in your closet. One day, you decide to deposit the money in a checking account. How will this action affect the M1 and M2 definitions of the money supply?
A. Both M1 and M2 will remain unchanged
B. M1 will decrease and M2 will increase
C. Both M1 and M2 will increase by $2000
Ans: A. Both M1 and M2 will remain unchanged
Economics
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Explain which of the following count as money. a) a check in Ann's checkbook b) currency in Ann's bank c) currency in Ann's purse d) Ann's checking deposit
What will be an ideal response?
Economics
If the velocity of money is constant, then a 2% increase in the money supply
A) must be the result of a 2% increase in the price level. B) would change nominal GDP by a smaller percentage. C) would change nominal GDP by an equal percentage. D) would change nominal GDP by a larger percentage.
Economics