If Many People Were to Suddenly Deposit into Their Checking

question 156

Multiple Choice

If many people were to suddenly deposit into their checking accounts large sums of cash previously held in their homes and/or wallets, and there were no offsetting actions by the Fed or change in institutional policies, this would

• A) decrease the M1 money supply but increase the M2 money supply.
• B) increase the excess reserves of banks and expand the money supply if these reserves are used to make additional loans.
• C) reduce the excess reserves of banks and indirectly decrease the M1 money supply.
• D) reduce the excess reserves of banks and indirectly increase the M1 money supply.

---

Definitions:

Campuses

Plural for campus, referring to the grounds and buildings of a university or college where academic activities take place.

Kruskal-Wallis Test

A nonparametric statistical test used to compare three or more independent samples, determining if there is a statistically significant difference between them.

Significance Level

The likelihood of incorrectly dismissing the null hypothesis in a statistical analysis when it is in fact correct.

Travel Time

The duration required to go from one location to another by any mode of transportation.