What happens to M1 when Serena withdraws $1000 from a checking account and places it in her purse? a.It increases by $1000 b.It increases by more than $1000 because of the money multiplier effect c.Nothing. It does not change. d.It decreases by more than $1000 because of the money multiplier effect e.It decreases by $1000

What happens to M1 when Serena withdraws $1000 from a checking account and places it in her purse? a.It increases by $1000 b.It increases by more than $1000 because of the money multiplier effect c.Nothing. It does not change. d.It decreases by more than $1000 because of the money multiplier effect e.It decreases by $1000

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.3P

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Similar questions

1. What is money? Discuss the characteristics of money as medium of exchange, unit of account, store of value, and means of deferred payment. 2. Define M1 and M2 3. Describe the money multiplier and explain how it works. Give examples for each one.
10. Discuss any three functions of Money?
"If the required reserve ratio is 20% and the current deposit is $50,000. Calculate the amount of new money created." O"$200,000" O "$250,000" O"$10,000" "$40,000"
Can you name some item that is a store of value, but does not serve the other functions of money?
In many casinos, a person buys chips to use for gambling. Within the casinos wafts, customers often can use these chips to buy food and drink or even a hotel room. Do chips in a gambling casino serve all three functions of money?
What are the four functions that money serves?
If you take 100 out of your piggy bank and deposit it in your checking account, how did M1 change? Did M2 change?
What components of money do we count in M2?
The money in your personal checking account is counted as: A. Neither M1 nor M2 money B. M1 money only C. M2 money only D. M1 and M2 money
19) Vault cash is equal to $8 million, deposits by depository institutions at the central bank are $2 million, the monetary base is $40 million, and bank deposits are $90 million. The money multiplier is equal to A) 2.5. B) 3.0. C) 4.0. D) 5.0. Answer: B Please give the process of calculation
What is the largest component of M1 money supply? a.Travelers checks b.Demand deposits c.Coin and currency d.Certificates of deposit e.Savings accounts
2. Suppose your bank lowers its minimum balance requirement by $500. So you take $500 out of your checking account and invest in Money Market Mutual Funds. What is the overall effect on M1 and M2? a. M1 falls by $500, M2 rises by $500. b. M1 is unchanged, M2 is unchanged. c. M1 falls by $500, M2 is unchanged. d. M1 is unchanged, M2 rises by $500.