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Lab 10
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What is M1?
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A monetary aggregate that includes currency in circulation and checkable deposits.
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Terms in this set (27)
What is M1?
A monetary aggregate that includes currency in circulation and checkable deposits.
Which of the Federal Reserve's measures of the monetary aggregates is composed of the most liquid assets?
Among M1 and M2, which is the largest measure?
M1
M2
Which economic institution determines or controls the money supply in the U.S.?
The Federal Reserve.
Which of the following assets is the least liquid?
A house
Which of the following assets is the most liquid?
traveler's check
The opportunity cost of money holdings is
the alternative interest income foregone from not holding some other asset.
How would you expect a fall in a country's population to alter its aggregate money demand function? Would it matter if the fall in population were due to a fall in the number of households or to a fall in the average size of a household?
There would be a decrease in money demand because there would be fewer transactions. The decrease in money demand would be larger if the decrease in population was due to a fall in the number of households.
Graph Q
Graph Q
Which of the following functions corresponds to a liquidity preference function and correctly identifies the relationship between the left-hand side variables and the right-hand side variables? (Note that Md is the quantity of money demanded, P the price level, i interest rates, Y real income, and f is the function operator that relates inputs to an output.)
M^d/P = f ( i (-), Y (+))
What are the determinants of the aggregate money demand?
Price level, national income, and interest rate.
Graph Q
Graph Q
Graph Q
Graph Q
