After you have studied economics in the news on pp. 202-203, answer the following questions?
A. What changes in the interest rate and the quantity of M2 occurred between 2007 and 2014?
B. Why is the outcome feared by bankers optimistic?
C. By how much would the quantity of M2 demanded decrease if the interest rate rose to 2 percent, or 3 percent, or 4 percent (express answer as a percentage of GDP)?
D. what could the banks do to prevent deposits from decreasing by as much as predicted by the demand for M2 curve in figure 3 on p. 203?
E. What would you expect to happen to the monetary base if interest rates rise and why?