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  3. 3. using the money supply (m1) model developed in

3. Using the money supply (M1) model developed in class, explain the likely effects on the...

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Economics

3. Using the money supply (M1) model developed in class, explainthe likely effects on the money supply of the following. Be sureyour answer indicates what changes in the model. (4 pointseach)

a. the U.S. Treasury sells new U.S. bonds at auction and doesnot spend the proceeds

b. more stores are willing to accept debit or credit cards fortransactions

c. banks start paying a higher interest rate on checkabledeposits

Answer & Explanation Solved by verified expert
3.7 Ratings (383 Votes)
aWhen US treasury sells bonds at auction and doesnt spend the proceeds the money supply decreases resulting in a leftward shift in the money supply curve as a result quantity of money in the economy    See Answer
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