4. Indicate what would happen to both M1 and M2 (increase, decrease, no change) due to each of the following events. Consider each lettered event to be independent of the others.
a) you write a check for cash at the casino
b) an individual redeems a personal CD and deposits the funds into a savings deposit account
c) U.S. commercial banks use some of their excess reserves to purchase $250 billion worth of U.S. Treasury securities from the Federal Reserve.
d) as the economy improves, banks ease their credit standards and approve a higher percentage of loan applications.
e) you spend $4,000 in U.S. currency while on your spring break trip to Acapulco (if you spent less than that you could not have had much fun)
a. M1- increases, M2-no change.
Moving money from one account to another doesnot change M2 as it is already included in it. But it will increase M1 as more money is put into circulation.
b. M1- No change , M2-No change.
as M1 doesnot include savings account and time deposits it is not affected. The money reedemed is deposited into savings account so it is already included in M2 therfore no change
c. M1 decrease, M2 decreases.
the money supply will decrease when it purachases treasury securities from Federal reserve and it will lead to a decrease in M1 and M2 .t
d. M1 increases, M2- no change
as more loans are approved, the money supply increases
Indicate what would happen to both M1 and M2 (increase, decrease, no change) due to each of the following events.
4. Indicate what would happen to both M1 and M2 (increase, decrease, no change) due to each of the following events. Consider each lettered event to be independent of the others.a) you write a check for cash at the casinob) an individual redeems a personal CD and deposits the funds into a savings deposit accountc) U.S. commercial banks use some of their excess reserves to purchase $250 billion worth of U.S. Treasury securities from the Federal Reserve.d) as the economy...
True/False (1 Point each) 1) When bond prices decrease, their yields to maturity increase. 2) The best forms of money and financial systems enjoy the benefits of trust, belief, and stability. 3) A fundamental function of a commercial bank is to take in deposits and make loans. 4) Traditional banks operate with low margins and high leverage. 5) Rates on bonds issued by a government can be negative. 6) ) The default risk premium is the same as the credit...
1) Securities are ______ for the person who buys them, but are ______ for the individual or firm that issues them. A) assets; liabilities B) liabilities; assets C) negotiable; nonnegotiable D) nonnegotiable; negotiable Part II: Short Answer/Problems—Answer all numbered questions @ 10 points each. Provide your answers in the space provided or the back of the page. Make sure to scan all work pages. Any quantitative questions require showing your work for full credit. Round all $ problems to the...