1. If I move $1000 from my savings account to my checking account, how will that affect M1? M2?

2. If I sell my 6-month CD for $5000 and deposit that money into my checking account, how will that affect M1? M2?

3. If I take $100 cash out of my checking account at the ATM, how will that affect M1? M2?

4. If interest rates in the economy increase, what happens to the prices of previously issued bonds?

5. When the FED buys bonds from the bank, how does that affect the supply of money in the money market? What happens to the nominal interest rate?

6. When the FED sells bonds to banks, how are the supply of money and the nominal interest rate affected?

7. If the price level ____________, the demand for money and the nominal interest rate will increase.

8. If the price level ____________, the demand for money and the nominal interest rate will decrease.

9. How are the supply curve in the money market and the supply of loanable funds different from one another?

10. If there is an increase in borrowing in the economy, how will the demand for loanable funds and the real interest rate be affected?

11. Give 3 examples of increases in borrowing that could increase the demand for loanable funds.

12. If there is an increase in saving in the economy, how will the supply of loanable funds and the real interest rate be affected?

13. Define open market operations.

14. If the interest rate increases, how are investment, consumption, and aggregate demand affected?

15. If the interest rate decreases, how are investment, consumption, and aggregate demand affected?