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Problem 1: If the RBA wants to permanently increases interest rates, then it should lower the money supply if
A. the liquidity effect is larger than the other effects.
B. the liquidity effect is smaller than the expected inflation effect.
C. there is fast adjustment of expected inflation.
D. there is slow adjustment of expected inflation.
Problem 2: If John creates a new demand deposit account at CBA and deposits $200 of his cash into the account:
A. M1 decreases and M2 stays the same.
B. M1 increases and M2 stays the same.
C. M1 stays the same and M2 increases.
D. M1 stays the same and M2 stays the same.
Financial Statement Analysis and Preparation
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Computation of Free Cash Flow
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