Asset Classes Assignment | Homework For You
December 4th, 2019
Suppose that there are five asset classes in the economy: 1) Cash 2) Checking Accounts 3) Savings and Money-Market Accounts 4) Bonds 5) Stocks. M1 includes asset classes 1 and 2, and M2 is the sum of M1 and asset class 3. All else being equal, how would each of the following changes affect demand for M1? And for M2? Explain.
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(a) The interest rate that banks pay on checking accounts increases from zero to a positive amount.
(b) Stockbrokers allow clients to write checks against the value of their stocks. Get Economics homework help today