The Federal Reserve System

timer Asked: Jan 5th, 2016

Question description

Indicate whether the money in each situation would be part of both m1 and m2 or just m2. Be prepared to tell why.

1. You receive a cash gift of $500 from a rich uncle
2. You open a regular checking account with a deposit of $400, the money you earned over the summer.
3. You receive $600 from the sale of a painting and deposit the money in an account.
4. You put a gift of $100 into a savings account.
5. You purchase a $50 US Savings Bond.
6. You write a check to pay for your college tuition.
7. If you totaled the m1 money supply and the m2 money supply listed above, which would be greater? Why? Is this always true?

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