Assignment 6 Start Assignment Due Sunday by 11:59pm Points 20 Submitting a file upload File Types doc, xIs, txt, itf, pdf, docx, xIsx, odt, ost, and docs Available after Feb 20 at 5am CHAPTER 14 1. (2 points) For a. and b., indicate whether each statement is true or false. a. Money market funds are included in the M1 money supply. True or false? b. As of May 2020, savings (in other words, deposits in savings accounts at banks) are included in the M1 money supply. True or false? 2. (2 points) For a. and b., indicate whether each statement is true or false. a. A coin in circulation, for example a quarter trapped under a couch cushion, is included in the M2 money supply. True or false? b. An increase in the number of physical credit cards and debit cards, ceteris paribus, represents an increase in the M2 money supply. True or false? 3. (2 points) Suppose you have a time deposit worth $1,200 that you withdraw from your bank, by redeeming the time deposit for cash. Use that information to answer parts a. and b. below. a. As a result of your withdrawal, did M1 change? If so, by how much did M1 change? b. As a result of your withdrawal, did M2 change? If so, by how much did M2 change? CHAPTER 15 4. (1 point) Suppose the central bank suddenly increases the reserve requirement. What effect would that increase have on the money supply? 5. (1 point) What power does a central bank have that allows it to purchase government bonds from banks using open market operations? 6. (1 point) Suppose nominal GDP increases, and at the same time the money supply remains constant. What will happen to the velocity of money as a result? 7. (1 point) Suppose real GDP and velocity of money stay constant, but at the same time the price level increases. What will happen to the money supply as a result? CHAPTER 168. (3 points) Suppose that economic recovery in Japan leads financial markets to anticipate an appreciation in the country's currency, the yen. What would be the likely impact on the following: a. demand for yen? b. supply of yen? c. Exchange rate of yen compared to the U.S. dollar (ceteris paribus)? 9. (3 points) Briefly discuss whether a strengthening U.S. dollar, relative to all other global currencies, is a "good" or "bad" thing for each of the following types of groups: a. a foreign investor putting money into an investment in the United States b. a U.S. financial investor with money already invested in another country c. a U.S. based firm exporting products to other countries 10. (3 points) Suppose interest rates on the Canadian dollar decrease compared to the rest of the world. What would be the likely impact on the following: a. demand for Canadian dollars? b. supply of Canadian dollars? c. Exchange rate of Canadian dollars compared to the U.S. dollar (ceteris paribus)? 11. (0.5 points) Which type of exchange rate policy would be the best for avoiding large short-run fluctuations in exchange rates? 12. (0.5 points) Which type of exchange rate policy would be the best for empowering a central bank to conduct countercyclical monetary policy