Author Question: When Maria deposits 100 in currency in her checkable deposit at Bank of America, the immediate ... (Read 118 times)

chandani · **on:** Jun 30, 2018

When Maria deposits 100 in currency in her checkable deposit at Bank of America, the immediate effect is that the quantity of M1 ________ because ________.

A) changes only if Bank of America has excess reserves; if the bank does not have excess reserves, the overall effect to M1 is too small to notice
B) decreases; checkable deposits are included in M2 but are not included in M1
C) does not change; both currency and checkable deposits are included in M1
D) changes, but the direction of the change cannot be determined; the direction of the change depends on what Bank of America does with the deposit
E) increases; both currency and checkable deposits are included in M1

Question 2

If real GDP increases by 6 percent and at the same time the population increases by 2 percent, then real GDP per person grows by

A) 3 percent. B) 6 percent. C) 8 percent. D) 4 percent. E) 2 percent.