Question

The answers for these two are either increase, decrease, or no change.

Joel purchases a share of Microsoft Stock through a broker for $44 from Celeste. Joel pays for the stock with funds from his Money Market brokerage account and Celeste deposits the proceeds from the sale in her checking account. As a result of this transaction M1 ___and M2 ___

*BTW ^ for this only ONE is no change. I keep getting answers that both of them are no change but that is only half right!

Ethel pulls $10,000 out from under her bed and deposits it in her savings account. As a result M1 [x] and M2 [y]

^ Same for this one! Only one of them is no change.

Hyperinflation occurred in Zimbabwe as a result of

Answers:	excess creation of inside money by the government.
	excess creation of outside money by the government.
	excess creation of inside money by the banking system.
	high resource prices.

Answer 1

Ans:

1) M1 increases and M2 no change

M1 includes cash and checking accounts,demand deposits and negotiable order of withdrawal (NOW) accounts.

M2 includes all elements of M1 as well as "near money." near money means savings deposits, money market securities, mutual funds and other time deposits.In this case there is no change in M2 because M2 includes M1.

2) M1 decreases and M2 no change

M1 includes cash and checking accounts,demand deposits and negotiable order of withdrawal (NOW) accounts.

M2 includes all elements of M1 as well as "near money." near money means savings deposits, money market securities, mutual funds and other time deposits.In this case there is no change in M2 because M2 includes M1.

3) excess creation of outside money by the government.

In order to support the expenditure government printed money, causing excess outside money.