Suppose you withdraw $1,000 in cash from your savings account. How does this act

Question

Suppose you withdraw $1,000 in cash from your savings account. How does this action affect the M1 and M2 money supplies?

Question 5 options:

A) M1 and M2 are both unchanged.

B) M1 rises by $1,000 and M2 falls by $1,000.

C) M1 rises by $1,000 and M2 is unchanged.

D) M1 is unchanged and M2 falls by $1,000

The Federal Reserve System was created

Question 6 options:

A) when the Constitution was written.

B) in 1913 during the Wilson administration.

C) during the Great Depression to insure bank deposits.

D) with the Monetary Control Act of 1980

Who was appointed as the Chair of the Board of Governors by President Reagan and was reappointed by Presidents George H.W. Bush, Clinton, and George W. Bush?

Question 7 options:

A) Alan Greenspan

B) Robert Reich

C) Milton Friedman

D) John Maynard Keynes

Explanation / Answer

Answer:

d. M1 falls by $1,000, and M2 is unchanged. (M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds and other time deposits.)

B) in 1913 during the Wilson administration.

A) Alan Greenspan

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