Equilibrium
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AP Macroeconomics › Equilibrium
Which of the following is not a part of M1?
Money in a personal savings account
Paper money
Traveler's checks
A check that has been written but not yet deposited
All of these are a part of M1.
Explanation
Money in a personal savings account would not be considered a part of M1. The reason for this is that money in a savings account is considered to be lacking in liquidity - as a result, money in a savings account is considered to belong to M2.
Which of the following is not a part of M1?
Money in a personal savings account
Paper money
Traveler's checks
A check that has been written but not yet deposited
All of these are a part of M1.
Explanation
Money in a personal savings account would not be considered a part of M1. The reason for this is that money in a savings account is considered to be lacking in liquidity - as a result, money in a savings account is considered to belong to M2.
Which of the following is not a part of M1?
Money in a personal savings account
Paper money
Traveler's checks
A check that has been written but not yet deposited
All of these are a part of M1.
Explanation
Money in a personal savings account would not be considered a part of M1. The reason for this is that money in a savings account is considered to be lacking in liquidity - as a result, money in a savings account is considered to belong to M2.
Which of the following is not a part of M1?
Money in a personal savings account
Paper money
Traveler's checks
A check that has been written but not yet deposited
All of these are a part of M1.
Explanation
Money in a personal savings account would not be considered a part of M1. The reason for this is that money in a savings account is considered to be lacking in liquidity - as a result, money in a savings account is considered to belong to M2.
Which of the following are considered open-market activities?
Selling Government Bonds
Decreasing Taxes
Increasing Government Spending
Raising Bank Reserve Requirements
None of these would be considered Open Market Activities
Explanation
Selling Government Bonds would be considered open market activities. When the Federal Reserve wants to adjust interest rates, they conduct open market operations - which involves selling government bonds (which raises interest rates by decreasing the money supply) or buying government bonds (which lowers interest rates by increasing the money supply.)
Which of the following are considered open-market activities?
Selling Government Bonds
Decreasing Taxes
Increasing Government Spending
Raising Bank Reserve Requirements
None of these would be considered Open Market Activities
Explanation
Selling Government Bonds would be considered open market activities. When the Federal Reserve wants to adjust interest rates, they conduct open market operations - which involves selling government bonds (which raises interest rates by decreasing the money supply) or buying government bonds (which lowers interest rates by increasing the money supply.)
Which of the following are considered open-market activities?
Selling Government Bonds
Decreasing Taxes
Increasing Government Spending
Raising Bank Reserve Requirements
None of these would be considered Open Market Activities
Explanation
Selling Government Bonds would be considered open market activities. When the Federal Reserve wants to adjust interest rates, they conduct open market operations - which involves selling government bonds (which raises interest rates by decreasing the money supply) or buying government bonds (which lowers interest rates by increasing the money supply.)
Which of the following are considered open-market activities?
Selling Government Bonds
Decreasing Taxes
Increasing Government Spending
Raising Bank Reserve Requirements
None of these would be considered Open Market Activities
Explanation
Selling Government Bonds would be considered open market activities. When the Federal Reserve wants to adjust interest rates, they conduct open market operations - which involves selling government bonds (which raises interest rates by decreasing the money supply) or buying government bonds (which lowers interest rates by increasing the money supply.)
Deflation, the increase in value of a currency over time, is much rarer than inflation. Although it can seem like a good thing, what is a problem caused by deflation?
It causes the value of debt to increase over time, harming borrowers.
Savings are worth more.
Wages decrease faster than prices.
Consumers' purchasing power increases.
Explanation
When money becomes more valuable over time but debts do not change, the money owed on debts will be worth much more than the amount borrowed. This is damaging to borrowers as they must pay back loans that are effectively much more expensive than they agreed to.
Deflation, the increase in value of a currency over time, is much rarer than inflation. Although it can seem like a good thing, what is a problem caused by deflation?
It causes the value of debt to increase over time, harming borrowers.
Savings are worth more.
Wages decrease faster than prices.
Consumers' purchasing power increases.
Explanation
When money becomes more valuable over time but debts do not change, the money owed on debts will be worth much more than the amount borrowed. This is damaging to borrowers as they must pay back loans that are effectively much more expensive than they agreed to.