Which money stock M1 or M2 had the bigger percentage chang

Which money stock ( M1 or M2} , had the bigger percentage change and what was the amount of the change. Be specific and provide the source for your money stock. Hint: Go to www.federalreserve.gov].

Solution

The money stock M2 had the bigger percentage change as it increased the income and so people were more interested in investing instead of consumption and hence the amount of bank deposits, demand deposits and savings certificates increased. The source of money stock was by the government as it resorted to deficit and purchase from abroad to increase its assets in foreign countries. There was inflation hence the govt. had to increase output which meant more income and hence people had more purchasing power.

By,

Nishant Bhatt