Which definition of money supply, M1 or M2, is most appropriate if most important function of money is its role as medium of exchange? Give reasons for your answer

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May 31, 2017
In response to the quotes above, do observational documentaries present an ‘objective’ construction of reality and the other modes of documentary (expository, interactive, reflexive) indicate a ‘subjective’ construction? Does this mean that one mode provides a more authentic representation of the truth than other modes?
May 31, 2017
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Which definition of money supply, M1 or M2, is most appropriate if most important function of money is its role as medium of exchange? Give reasons for your answer

a)
Which definition of money supply, M1 or M2, is most appropriate if most important
function of money is its role as medium of exchange? Give reasons for your answer

(4 marks)
b)
When interest rates rise there is a tendency for people to switch their money out of
demand deposits and other chequable deposits into money market deposit accounts
and money market mutual funds.
Required

Explain clearly how this affects the following and implication on the level of
aggregate demand

i)
Money supply as define by M1

(5 marks)

ii)
Money supply as defined by M2

(5 marks)

c)
Suppose a country like Tanzania were to adopt Kenya shilling as its own currency,
explain how the ksh money supply would be affected.

(6 marks)

 

 

 

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