Answered: True or False:,1. Economists are not…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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True or False:,1. Economists are not completely in agreement on what constitutes money for all purposes.,2. People use nontransaction accounts primarily because they generally pay higher interest rates than transaction deposits.,3. Most purists would argue that nontransaction deposits are near money assets but not money itself, because they are not a direct medium of exchange.,4. Liquidity refers to the ease with which one asset can be converted into another asset or goods and services.,5. Money market mutual funds have experienced tremendous growth over the last 20 years, but they are not highly liquid assets.,6. M1 is substantially larger than M2.,7. M1 includes currency, checkable deposits, and traveler’s checks, but not savings accounts.,8. People prefer to keep the bulk of their liquid assets as currency or in transaction accounts rather than in the form of savings accounts of various kinds.

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.

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