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if the federal reserve decided to include virtual money like bitcoins in its measure of the money supply, what would be the effect on m1 or m2?

Sagot :

Parrain

If the Fed decided that virtual money should be included in money supply, we would see a situation where both M1 and M2 increase/ rise.

M1 is:

  • The most liquid money instruments
  • Inclusive of cash and close instruments

If virtual money was counted as money, it would increase M1 because virtual money is very liquid as it can easily be converted to cash so it would be counted as M1.

M2 would increase because M1 is part of M2.

In conclusion, both M1 and M2 would increase.

Find out more about M1 and M2 at https://brainly.com/question/25458814.

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