Exam 2: The Role of Money in the Macroeconomy

The difference between M1 and M2 definitions of the money supply is that M2 includes

Which of the following is the most liquid?

__________ is the narrowest and most traditional definition of money.

Changes in the money supply have an immediate effect on an economy's

Deflation is another word for

When commercial banks make loans, they

Which of the following is the least liquid?

In a recession, an increase in the money supply is likely to cause

In the United States, the money supply is determined by the

An increase in the money supply is most likely to lead to rising prices when

The M1 definition of money includes

In the United States, money is backed by

Changes in the money supply do not always cause predictable changes in the level of spending because

Which of the following is not included in M3?

Money increases economic growth by facilitating transfers from

Money functions as a standard of value when people

When hyperinflation occurs, money becomes a less efficient medium of exchange because money ceases to be a reliable

The proportion of the money supply that is held in the form of currency is ultimately determined by

The M1 definition of the money supply includes

Increases in the money supply will not necessarily cause inflation if the increase in the money supply is offset by