Assuming No Other Changes, If Balances in Money Market Deposit

question 71

Multiple Choice

Assuming no other changes, if balances in money market deposit accounts increase by $50 billion and small- denominated time deposits decrease by $50 billion, the

• A) M1 and M2 money supplies will not change.
• B) M2 money supply will increase.
• C) M1 money supply will decline.
• D) M2 money supply will increase and the M1 money supply will decrease.

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Definitions:

Income Statement

A financial statement showing the company's revenues, expenses, and profits over a specific period.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

Manufacturing Overhead

All indirect costs related to the manufacturing process, such as utilities and salaries for management, that cannot be directly traced to specific products.

Direct Materials

Ingredients that are identifiable as directly contributing to the creation of a product.