Author Question: M2 consists of A) M1 plus currency at the banks. B) M1 plus Federal Reserve notes. C) M1 plus ... (Read 35 times)

mydiamond · **on:** Jun 30, 2018

M2 consists of

A) M1 plus currency at the banks.
B) M1 plus Federal Reserve notes.
C) M1 plus checkable deposits.
D) M1 plus saving deposits, small time deposits, and money market funds.
E) M1 plus traveler's checks.

Question 2

Barbara is willing to loan 10,000 if she can earn a real interest rate of 6 percent. Everything else the same, if the inflation rate is 2 percent, she would agree to loan the 10,000 if the nominal interest rate is ________ because ________.

A) 8 percent or higher; she would not earn her desired amount of 6 percent if the nominal interest rate was any lower
B) 4 percent or lower; she would not earn her desired amount of 6 percent if the nominal interest rate was any higher
C) 8 percent; she would earn more than her desired amount of 6 percent
D) 8 percent or lower; she would not earn her desired amount of 6 percent if the nominal interest rate was any higher
E) 4 percent or higher; she would not earn her desired amount of 6 percent if the nominal interest rate was any lower