Question Details

You move some of your savings account balance into your checking account 



1. Suppose the money multiplier is 6. What happens to the money supply if the Fed buys $3 billion of bonds? 
a) $3b increase b) $3b decrease c) $18b increase d) $18b decrease 
2. Suppose you sell a bond to the Fed for $10,000 and deposit the proceeds in your checking account. As a direct result of this 
a) M1 and M2 both increase b) M1 increases and M2 decreases 
c) M1 increases and M2 is unchanged d) M1 is unchanged and M2 increases 
3. Suppose you buy a $500 term deposit by writing a check on your checking account. As a direct result of this 
a) M1 and M2 both increase b) M1 decreases and M2 increases 
c) M1 increases and M2 is unchanged d) M1 decreases and M2 remains unchanged 
4. Money and income are 
a) mirror images of each other b) two quite different concepts 
c) both measured as a per annum flow d) two ways of looking at the same thing 
5. You move some of your savings account balance into your checking account . 
a) M2 falls and M1 rises b) M1 falls and M2 rises 
c) M1 and M2 are unchanged d) M1 rises and M2 remains unchanged



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