consider the following development which happened at the same time: households reduced their currency holding in favor of bank deposits by $1 million and the Fed purchased a $1 million treasury bill from the U.S. government. what is the immediate or initial effect of these two actions on the money supply (M2)? A)M2 will increase by $1 million. B) M2 will remain the same. C)M2 will decrease by $1 million. D) M2 will increase by $2 million.
consider the following development which happened at the same time: households reduced their currency holding in favor of bank deposits by $1 million and the Fed purchased a $1 million treasury bill from the U.S. government. what is the immediate or initial effect of these two actions on the money supply (M2)? A)M2 will increase by $1 million. B) M2 will remain the same. C)M2 will decrease by $1 million. D) M2 will increase by $2 million.
Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter13: Money And The Banking System
Section: Chapter Questions
Problem 8CQ
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consider the following development which happened at the same time: households reduced their currency holding in favor of bank deposits by $1 million and the Fed purchased a $1 million treasury bill from the U.S. government. what is the immediate or initial effect of these two actions on the money supply (M2)? A)M2 will increase by $1 million. B) M2 will remain the same. C)M2 will decrease by $1 million. D) M2 will increase by $2 million.
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