Bob Read a Newspaper Story That Indicated a Dramatic Increase

question 185

Multiple Choice

Bob read a newspaper story that indicated a dramatic increase in money market accounts and certificates of deposit during the last three months.The story reported that all other major components of the U.S.money supply remained unchanged.Based on this information,Bob can conclude that for the past quarter:

• A)both the M-1 and M-2 money supplies were stable.
• B)the M-1 money supply has increased,but the M-2 money supply was stable.
• C)the M-2 money supply has increased,but the M-1 money supply was stable.
• D)both the M-1 and the M-2 money supplies have increaseD.The M-1 definition of the money supply consists of currency,checking account deposits,and travelers' checks.Since all of these components remained stable in size,the M-1 money supply must have remained stable.The M-2 definition includes everything in the M-1 definition,but it also includes other components such as funds held in certificates of deposit and money market accounts.Since CDs and money market accounts grew dramatically,and no other components decreased,the M-2 money supply must have increased.

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Definitions:

Anxiety-Provoking Scenes

Situations or scenarios that trigger a high level of anxiety, often used in exposure therapy to help patients confront and reduce their fear.

Exposure Methods

Techniques in psychotherapy that involve introducing clients to feared objects or situations in a controlled manner to reduce anxiety.

Feared Stimuli

Objects, situations, or events that evoke fear or anxiety in an individual.

Two-Factor Theory

A psychological theory proposing that human emotions are based on two factors: physiological arousal and cognitive labeling of that arousal.