1Why is M2 sometimes a more stable measure of money than M1? Explain using the definition of M1 and M2.

2 For each of following, determinate weather it is an asset or liability on the accounting books of a bank. Explain why in each case.

Cash in the vault

Demand deposits

Savings deposits

Reserves Loans

Deposits at the Federal Reserve

3.Describe the Fed's tendency to "lean again the wind" Do the Fed's polices tend to stabilize or destabilize the economy