1. Why do you suppose that the market clearing interest rates on bank savings and time deposits have been rising relative to the market clearing interest rates on bank loans? (Hint: as more chief deposit officers compete for depositors%u2019 funds, what happens to the market demand for these funds?)
2. Can you provide one possible explanation for why currency as a percentage of M1 has generally increased for the past 20 years? (Hint: What is the other primary component of M1, and what has happened to its growth during the past 20 years?)