: Plot graphs and show calculation where necessary.

Question 1: Short answer questions

1.Consumer expenditures on durable goods such as cars and furniture, as well as purchases of new houses, fall much more than expenditures on nondurable goods and services during most recessions. Why do you think that is?

2.Explain why you think the Federal Reserve Bank tracks M1 and M2.

3.The total amount of U.S. currency in circulation divided by the U.S. population comes out to about $3,500 per person. That is more than most of us carry. Where is all the cash?