The introduction of NOW-accounts (interest-earning checking accounts) in 1980 led to

Question

Quizplus · Accepted Answer

The introduction of NOW-accounts led to transfers from passbook saving deposits into NOW-accounts, which increased the M1 component of the money supply. At the same time, the introduction of NOW-accounts did not affect the M2 component of the money supply, leaving it unchanged. Furthermore, the decrease in the income velocity of M1 occurred due to the increased availability of NOW-accounts, making it easier for consumers to access and spend their money directly from their checking accounts. Therefore, all of the above choices are correct.

The Introduction of NOW-Accounts (Interest-Earning Checking Accounts) in 1980 Led