Assuming No Other Changes, If Checkable Deposits Increase by $40

question 92

Multiple Choice

Assuming no other changes, if checkable deposits increase by $40 billion and currency in circulation decreases by $40 billion, the

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

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Definitions:

Own-price Elasticity

A measure of how sensitive the quantity demanded of a good is to a change in its own price, reflecting the responsiveness of demand to price changes.

Quantity Demanded

The quantity of a product that buyers are ready and capable of buying at a specific price.

Shoes

Footwear items designed to protect and provide comfort to the human foot while performing various activities.

Elasticity of Demand

A measure of how much the quantity demanded of a good changes in response to a change in the price of that good.