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Author Question: According to the law of supply in the foreign exchange market, when the U.S. exchange rate rises, ... (Read 49 times)

dollx

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on: Jun 29, 2018
According to the law of supply in the foreign exchange market, when the U.S. exchange rate rises, the quantity of U.S. dollars supplied will decrease.
 
  Indicate whether the statement is true or false

Question 2

By definition, all parts of M2 are money. Is the previous statement correct or not? Explain your answer.
 
  What will be an ideal response?


Beatricemm

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Reply #1 on: Jun 29, 2018
Answer to Question 1

FALSE

Answer to Question 2

The statement is incorrect. Many of the assets in M2 are money. But not all the assets are money. Some of the savings deposits, time deposits, and money market funds are not means of payment and hence are not money. But they are included in M2 because they are easily converted into money.


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