If a Person Withdraws $500 from His/her Chequing Account and Holds

question 178

Multiple Choice

If a person withdraws $500 from his/her chequing account and holds it as currency, then M1+ will ________ and M1++ will ________.

• A)increase; decrease
• B)not change; not change
• C)not change; increase
• D)decrease; increase
• E)decrease; decrease

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Definitions:

Market System

(1) An economic system in which individuals own most economic resources and in which markets and prices serve as the dominant coordinating mechanism used to allocate those resources; capitalism. Compare with command system. (2) All the product and resource markets of a market economy and the relationships among them.

Retained Earnings

Profits that a company keeps after dividends are paid out to shareholders, often used for reinvestment in the business or to pay off debt.

Funding of R&D

The financial investment allocated towards research and development activities in order to innovate, enhance product quality, or create new products.

Established Corporations

Large, well-known companies that have been in existence for a considerable amount of time, typically characterized by strong brand recognition and financial stability.