Short Answer Questions. Please address the following questions. Your total page requirement is 3-5 pages.
1. What makes money an imperfect store of value?
2. Suppose that someone deposits $10,000 into a bank. Assuming a reserve requirement ratio of 20%, what will be the eventual increase in checking account balances?
3. What would be a way for the Federal Reserve to stimulate a sluggish economy?
4. True/False Statements. Indicate if the statement below is True or False. You must support your answer with a few sentences for each statement.
a. Credits cards are NOT a part of the M1 or M2 money supply.
b. When one individual writes a check to another individual the money supply will not be changed.
c. The Federal Reserve System is the central bank of the United States.
d. When the Fed purchases government bonds, it decreases the money supply.
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