The Federal Reserve uses two definitions of the money supply, M1 and M2, because
A) M2 satisfies the medium of exchange function of money, whereas M1 satisfies the store of the value function.
B) M2 is a narrow definition focusing more on Liquidy, whereas M1 is a broader definition of the money supply.
C) M1 is a narrow definition focusing more on liquidy, whereas M2 is a broader definition of the money supply.
The Federal Reserve uses two definitions of the money supply, M1 and M2, because
A) M2 satisfies the medium of exchange function of money, whereas M1 satisfies the store of the value function.
B) M2 is a narrow definition focusing more on Liquidy, whereas M1 is a broader definition of the money supply.
C) M1 is a narrow definition focusing more on liquidy, whereas M2 is a broader definition of the money supply.
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Related questions
1. The market in which loans are bought and sold is called the:
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loan market. |
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money market. |
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secondary loan market. |
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primary loan market. |
2. Which of the following is omitted in a barter transaction?
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trade |
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medium of exchange |
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store of value |
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money |
3. If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their _________________________ will be satisfied.
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balance of trade |
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double coincidence of wants |
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convenience of exchange |
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division of labour |
4. If loans become far less available, then sectors of the economy that ______________ like business investment, home construction, and car manufacturing can be dealt a crushing blow.
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depend on borrowed money |
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typically generate extraordinary gains |
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make loans to financial capital markets |
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failed to diversify risk |
5. Stealth bank has deposits of $600 million. It holds reserves of $30 million and government bonds worth $80 million. If the bank sells its loans at the market value of $400 million, what will its total assets equal?
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$110 million |
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$710 million |
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$480 million |
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$510 million |
6. Lance paid $175,000 for his house in 2003 and sold it for $325,000 in 2006. What function did the house serve during the time Lance owned it?
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medium of exchange |
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unit of account |
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store of value |
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unit of exchange |
7.Which of the following terms is considered to be a narrow definition of the money supply that includes, among other things, currency?
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savings |
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money |
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M2 |
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M1 |
8. Which of the following institutions determines the quantity of money in the economy as its most important task?
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U.S. Department of the Treasury |
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Federal Open Market Committee |
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Central Bank |
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Federal Reserve Board of Governors |
9. How are the specific interest rates for the lending and borrowing markets determined?
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U.S. Treasury Department Board policy |
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by the forces of supply and demand |
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through open market operations |
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by altering the discount rate |
10.When the central bank lowers the reserve requirement on deposits:
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the money supply increases and interest rates decrease. |
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the money supply and interest rates decrease. |
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the money supply and interest rates increase. |
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the money supply decreases and interest rates increase. |
1. Which of the following both increase the money supply?
an increase in the discount rate and an increase in the interest rate on reserves
an increase in the discount rate and a decrease in the interest rate on reserves
a decrease in the discount rate and an increase in the interest rate on reserves
a decrease in the discount rate and a decrease in the interest rate on reserves
wealth. M1. M2. |
wealth held by people in their savings accounts. wealth held by people in money market mutual funds. everything that is included in M2 plus some additional items |
borrow more from the Fed and lend less to the public. The money supply decreases. borrow less from the Fed and lend more to the public. The money supply increases. borrow less from the Fed and lend less to the public. The money supply decreases. |
the amount of reserves banks must hold against deposits. reserves banks must hold based on the number and type of loans they make. the interest rate at which banks can borrow from the Fed. |
trades require a double coincidence of wants. currency is accepted primarily to make further trades. people must spend time searching for the products they wish to purchase. |
2485 6295 7075 |
decreased both the money multiplier and the money supply. increased the money multiplier and decreased the money supply. decreased the money multiplier and increased the money supply. |
Amber with Tom Rupert with Rob None of the above is correct. |
| 10. Economists use the term money to refer to |
all wealth.
all assets, including real assets and financial assets.
all financial assets, but not real assets.
those types of wealth that are regularly accepted by sellers in exchange for goods and services.
