Indicate What Would Happen To M1 And M2 Increase Decrease No Change For Each Of

Indicate what would happen to M1 and M2 (increase, decrease, no change) for each of the following scenarios.

    (6 points)

a. The housing market improves and banks collectively increase net mortgage lending by $300m in the

    4th quarter of 2016.

b. If an individual goes to a bank and receives a $500 loan which the bank deposits electronically in their

    savings account.

c. Thieves successfully rob an armored car transporting $5m in $2 bills from the Richmond Fed to the Atlanta Fed.

d. A corporation uses money from a demand deposit account to purchase a negotiable CD.

e. Your bank lowers the minimum balance requirement on checking accounts by $500. As A result

    you withdraw $500 in currency from your regular checking which you subsequently spend on your spring break

    trip to Mexico.

f. You redeem a U.S. Savings Bond for cash at your local bank.

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