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I'm not sure what it means by whether or not the quantity of money was changed through all the transactions.

"Vincenzo goes shopping. First, he visits an ATM, where he gets $200 from his savings account. Then he visits a clothing store, where he buys a shirt for $50 using his Visa card. At lunchtime, he meets Donna, his Italian girlfriend, who has just arrived from Rome and has only euros (the money of Italy) in her purse. Donna uses some of her euros to buy $100 from Vincenzo. Donna buys lunch and pays with the $100 that she got from Vincenzo. Did any of the transactions done by Vincenzo and Donna change the quantity of money? Explain each transaction’s effect on M1 and M2."

2007-03-24 17:12:48 · 2 answers · asked by ohok 2 in Social Science Economics

2 answers

I think Vincenzo is only out of $100 cash.

2007-03-25 05:24:41 · answer #1 · answered by ragincajun1957 4 · 0 0

The only effect I believe was a net gain of M1 of $200.

2007-03-25 08:09:39 · answer #2 · answered by Santa Barbara 7 · 0 1

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