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M2 includes: Only the various short-term and checkable savings accounts. all the forms of money in M1 plus various short-term and checkable savings...

M2 includes:

Only the various short-term and checkable savings accounts.

all the forms of money in M1 plus various short-term and checkable savings accounts.

all the forms of money in M3 minus the money in M1 (M3 minus M1 equals M2).

M1 minus the various short-term and checkable savings accounts.


If the Federal reserve buys $4 million in bonds from the public, and the reserve requirement in the banking system is 20% (assume that banks are fully loaned up), then there will be:

a decrease in the money supply of $100 million.

an increase in the money supply of $80 million.

an increase in the money supply of $20 million.

a decrease in the money supply of $25 million.

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