Fred Jones withdraws $1,000 in cash from his savings account. What immediate effect does this transaction have on the monetary aggregate measures of M1 and M2? (A) M1 Increases, M2 decreases (B) M1 Increases, M2 no change (C) M1 Decreases, M2 no change (D) M1 no change, M2 decreases (E) M1 no change, M2 no change

Homework (Ch 34) a central bank called the Fed, but a major difference is that this economy is closed (and therefore does not have any interaction with other world economies). The money market is currently in equilibrium at an interest rate of 2.5% and a quantity of money equal to $0.4 trillion, designated on the graph by the grey star symbol. INTEREST RATE (Percent) 4.5 4.0 3.5 3.0 2.5 2.0 - 1.5 + 1.0 + 0.5 0 Money Demand 0.1 0.2 0.3 0.4 Money Supply 0.5 0.6 0.7 0.8 14 New MS Curve + New Equilibrium ? Q Search this course

The Federal Reserve and the money supply Suppose the money supply (as measured by checkable deposits) is currently $300 billion. The required reserve ratio is 25%. Banks hold $75 billion in reserves, so there are no excess reserves.   The Federal Reserve (“the Fed”) wants to decrease the money supply by $32 billion, to $268 billion. It could do this through open-market operations or by changing the required reserve ratio. Assume for this question that you can use the simple money multiplier.   If the Fed wants to decrease the money supply using open-market operations, it should   ______(buy/sell) $_________    billion worth of U.S. government bonds.   If the Fed wants to decrease the money supply by adjusting the required reserve ratio, it should ______(increase/decrease)   the required reserve ratio. THis is one question . please answer with an explanation.

Based on the analysis presented in this week's lectures, the following actions can increse the total Money Supply (M1) in the economy, EXCEPT: Increase in Monetary Base (Mo) Expansion of Excess Reserves Reduction of Reserve Requirements (RR) Increase in Bank Deposits (Do)