Author Question: If the public takes funds from currency in circulation and deposits them into their checking ... (Read 23 times)

ts19998 · **on:** Jun 30, 2018

If the public takes funds from currency in circulation and deposits them into their checking accounts, the:
a. M1 and M2 money multipliers fall.
b. M1 and M2 money multipliers rise.
c. M1 and M2 money multipliers do not change.
d. M1 money multiplier rises, and the M2 money multiplier falls.
e. M1 money multiplier falls, and the M2 money multiplier rises.

Question 2

Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and current international transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and current international transactions become more negative (or less positive).
b. The GDP Price Index rises, and current international transactions become more negative (or less positive).
c. The GDP Price Index and current international transactions remain the same.
d. The GDP Price Index rises, and current international transactions remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.