Assume the central bank decides to lower the bank's reserve requirements. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the right.
b. Start the analysis in the real credit market with demand for real credit shifting to the left.
c. Start the analysis in the real credit market with demand for real credit shifting to the right.
d. Start the analysis in the real credit market with supply of real credit shifting to the left.
e. Start the analysis in the real credit market with supply of real credit shifting to the right.
Question 2 - Which of the following statements is correct?
a. The financial assets in M1 and M2 can be stored but not spent.
b. All the financial assets in M1 can be spent.
c. All the financial assets in M2 can be spent.
d. All the financial assets in M1 and M2 can be spent.
e. The financial assets in M2 are more liquid than the ones in M1.
Question 3 - Assume the central bank decides to lower the bank's reserve requirements. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the left.
b. Start the analysis in the real goods market with aggregate demand shifting to the right.
c. Start the analysis in the real credit market with demand for real credit shifting to the left.
d. Start the analysis in the real credit market with demand for real credit shifting to the right.
e. Start the analysis in the real credit market with supply of real credit shifting to the right.
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