Joan has the following assets and liabilities: $$\begin{array} { | l | r | }
\hline \text { Credit card balarice } & \$ 1,000 \
\hline \text { Cash } & \$ 200 \
\hline \text { Goverzunent bonds } & \$ 3,000 \
\hline \text { Stock } & \$ 4,000 \
\hline \text { Checking } & \$ 1,500 \
\hline \text { Car loar balarice } & \$ 10,000 \
\hline \text { Car } & \$ 15,000
\end{array}$$
Which of the following actions would decrease Joan's money demand by $200?
A)Joan writes a check for $200 to purchase additional shares of stock.
B)Joan gets a $200 cash advance on her credit card and puts the proceeds in her checking account.
C)Joan writes a $200 check for cash and holds the cash.
D)Joan sells $200 worth of stocks and puts the proceeds in her checking account.

Question

Joan has the following assets and liabilities: $$\begin{array} { | l | r | } 
\hline \text { Credit card balarice } & \$ 1,000 \
\hline \text { Cash } & \$ 200 \
\hline \text { Goverzunent bonds } & \$ 3,000 \
\hline \text { Stock } & \$ 4,000 \
\hline \text { Checking } & \$ 1,500 \
\hline \text { Car loar balarice } & \$ 10,000 \
\hline \text { Car } & \$ 15,000
\end{array}$$  
Which of the following actions would decrease Joan's money demand by $200?
A)Joan writes a check for $200 to purchase additional shares of stock.
B)Joan gets a $200 cash advance on her credit card and puts the proceeds in her checking account.
C)Joan writes a $200 check for cash and holds the cash.
D)Joan sells $200 worth of stocks and puts the proceeds in her checking account.

Quizplus · Accepted Answer

Writing a check for $200 to purchase additional shares of stock decreases Joan's money demand because it moves money out of her liquid assets (checking account) and into a less liquid form (stocks), without increasing the total amount of money she has available for spending.

Joan Has the Following Assets and Liabilities Which of the Following Actions Would Decrease Joan's Money Demand