« previous next »

Author Question: Recent financial turmoil has caused many people to increase saving and to prefer assets that are ... (Read 78 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?

Approximately 500,000 babies are born each year in the United States to teenage mothers.

Did you know?

Urine turns bright yellow if larger than normal amounts of certain substances are consumed; one of these substances is asparagus.

Did you know?

During pregnancy, a woman is more likely to experience bleeding gums and nosebleeds caused by hormonal changes that increase blood flow to the mouth and nose.

Did you know?

In 2012, nearly 24 milliion Americans, aged 12 and older, had abused an illicit drug, according to the National Institute on Drug Abuse (NIDA).

Did you know?

Pregnant women usually experience a heightened sense of smell beginning late in the first trimester. Some experts call this the body's way of protecting a pregnant woman from foods that are unsafe for the fetus.

In 2006 an Iraqi tribunal convicted Saddam Hussein of murdering his own people and sentenced him to In 2006 an Iraqi tribunal convicted Saddam Hussein of murdering his own people and sentenced him to
Aggregates are people who happen to be in the same place at the same time. Aggregates are people who happen to be in the same place at the same time.
Despite the globe’s vast social change, people all over the world continue to make race a ... Despite the globe’s vast social change, people all over the world continue to make race a ...
Enterohepatic recirculation of a drug can increase its half-life in the body and prolong its ... Enterohepatic recirculation of a drug can increase its half-life in the body and prolong its ...
Chronic disease is caused by a mixture of genetic and environmental influences Chronic disease is caused by a mixture of genetic and environmental influences
Why do people hate mathematics? Why do people hate mathematics?
Video: Kidney Stones

For a complete list of videos, visit our video library