If You Transfer $1,000 from Your Savings Account to Your

question 1

Multiple Choice

If you transfer $1,000 from your savings account to your checking account:

• A) M1 decreases by $1,000, and M2 increases by $1,000.
• B) M1 increases by $1,000, and M2 decreases by $1,000.
• C) M1 and M2 don't change.
• D) M1 increases by $1,000, but M2 doesn't change.

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Definitions:

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, often used as an indicator of inflation.

Pretzels

A type of baked bread product made from dough most commonly shaped into a twisted knot.

Cookies

Small pieces of data sent from a website and stored on a user's computer by the user's web browser while the user is browsing, often used to remember information about the user.

Information Asymmetry

A situation where one party in a transaction has more or better information than the other, often leading to an imbalance in power or unfair advantage.