If Traveler's Checks Were $500 Higher and Saving Deposits Were

question 121

Multiple Choice

If traveler's checks were $500 higher and saving deposits were $1,000 higher, M1 would be

• A)$500 higher and M2 would be $1,000 higher
• B)$500 higher and M2 would be $1,500 higher
• C)M2 and M1 would be $1,500 higher
• D)None of the above are correct.

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Definitions:

Long-Run Phillips

The concept in economics that suggests there is no long-term trade-off between inflation and unemployment, indicating that in the long run, the Phillips curve is vertical.

Adverse Supply Shock

An unexpected event that suddenly decreases the supply of a product or commodity, leading to higher prices and lower quantity in the market.

Inflation Expectations

The anticipated rate of inflation in the future, which can influence consumer and business spending and saving decisions.

Short-Run Phillips

The Short-Run Phillips Curve describes an inverse relationship between the rate of inflation and the unemployment rate in an economy over a short period.