« previous next »

Author Question: Recent financial turmoil has caused many people to increase saving and to prefer assets that are ... (Read 50 times)

karateprodigy

  • Hero Member
  • *****
  • Posts: 550
on: Jun 30, 2018
Recent financial turmoil has caused many people to increase saving and to prefer assets that are perceived to be relatively safe and liquid. What are the likely effects on M1 and M2?
 
  What will be an ideal response?

Question 2

The Federal Reserve System has a network of how many Federal Reserve Banks?
 
  A) 12
  B) 36
  C) 50
  D) 84


FergA

  • Sr. Member
  • ****
  • Posts: 352
Reply #1 on: Jun 30, 2018
Answer to Question 1

Increased saving implies reduced consumption, so holding of the most liquid assets, M1, should decline. Instead, people will hold more of the less liquid, interest-bearing assets within M2. If people are shifting away from illiquid assets like corporate stock in favor of assets like money market mutual fund shares, then M2 should rise.

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Certain topical medications such as clotrimazole and betamethasone are not approved for use in children younger than 12 years of age. They must be used very cautiously, as directed by a doctor, to treat any child. Children have a much greater response to topical steroid medications.

Did you know?

Eating food that has been cooked with poppy seeds may cause you to fail a drug screening test, because the seeds contain enough opiate alkaloids to register as a positive.

Did you know?

Chronic necrotizing aspergillosis has a slowly progressive process that, unlike invasive aspergillosis, does not spread to other organ systems or the blood vessels. It most often affects middle-aged and elderly individuals, spreading to surrounding tissue in the lungs. The disease often does not respond to conventionally successful treatments, and requires individualized therapies in order to keep it from becoming life-threatening.

Did you know?

More than 30% of American adults, and about 12% of children utilize health care approaches that were developed outside of conventional medicine.

Did you know?

Bisphosphonates were first developed in the nineteenth century. They were first investigated for use in disorders of bone metabolism in the 1960s. They are now used clinically for the treatment of osteoporosis, Paget's disease, bone metastasis, multiple myeloma, and other conditions that feature bone fragility.

Cellular movements caused by the actions of flagella and cilia Cellular movements caused by the actions of flagella and cilia
Pneumonia. This common lung inflammation may be caused by bacteria, viruses, or fungi and is often d Pneumonia. This common lung inflammation may be caused by bacteria, viruses, or fungi and is often d
Eugène Delacroix, Liberty Leading the People. Eugène Delacroix, Liberty Leading the People.
In old age, as in all other stages of the life course, people find life more pleasant if they have ... In old age, as in all other stages of the life course, people find life more pleasant if they have ...
Diagram Showing How Conduction Aphasia is Caused Diagram Showing How Conduction Aphasia is Caused
People are living longer today than in previous decades People are living longer today than in previous decades
Video: Dissociative Disorders (Part 1)

For a complete list of videos, visit our video library