1. If Jane Brown closes her account at the First Bank and uses the money instead to open a money market mutual fund account, what happens to M1+ and M2++? Why? 2. What happens to M2+ when chequable...

1. If Jane Brown closes her account at the First Bank  and uses the money instead to open a money market mutual fund account, what happens to M1+ and M2++? Why?

2. What happens to M2+ when chequable deposits are converted into time deposits?

3. Why might the procyclical behaviour of interest rates (rising during business cycle expansions and falling during recessions) lead to procyclical movements in the money supply?

4. If the Bank of Canada paid interest on bank reserves,  what would happen to r ?

5. If the Bank of Canada sells $1 million of bonds and banks reduce their borrowing from the Bank of Canada by $1 million, predict what will happen to the money supply.