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The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne
Edition 13ISBN: 9780132992695The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne
Edition 13ISBN: 9780132992695 Exercise 6
People usually cannot spend the deposits they hold in commercial-bank savings accounts or savings and loan institutions without first withdrawing the funds-that is, converting them into currency or checkable deposits. But because they're able to do that at almost no cost, these savings deposits are assets that come very close to being money.
(a) Would you expect total spending in the United States over some Period of time to be more closely correlated with M1 or with M2?
(b) Will your answer change if savings and loan institutions allow customers to pay bills through telephone transfers of their deposits to the accounts of others?
(a) Would you expect total spending in the United States over some Period of time to be more closely correlated with M1 or with M2?
(b) Will your answer change if savings and loan institutions allow customers to pay bills through telephone transfers of their deposits to the accounts of others?
Explanation
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The circulation of the money in the econ...
The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne
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