Asked by tabatha nieves on May 18, 2024
Verified
If you withdraw $500 from your savings account and deposit it in your checking account, then M1 will change by _____ and M2 will change by _____.
M1
A category of the money supply that includes all physical money like coins and currency, as well as demand deposits, checking accounts, and negotiable order of withdrawal (NOW) accounts.
M2
A measure of the money supply that includes cash, checking deposits, and easily convertible near money.
- Become familiar with the essential techniques and instruments the Federal Reserve applies to direct the money supply.
- Discuss the significance of bank reserves, the money multiplier effect, and how fractional reserve banking contributes to money supply changes.
Verified Answer
SX
Learning Objectives
- Become familiar with the essential techniques and instruments the Federal Reserve applies to direct the money supply.
- Discuss the significance of bank reserves, the money multiplier effect, and how fractional reserve banking contributes to money supply changes.