Suppose Jared takes $200 from his savings account and holds it as cash.The immediate result of this transaction is that M2

Question

Quizplus · Accepted Answer

When Jared withdraws $200 from his savings account and holds it as cash, M2 remains the same because M2 includes both savings deposits and cash among other components. However, M1 increases by $200 because M1 includes cash and checking deposits, and by holding more cash, Jared has increased the amount of money in circulation that is counted in M1.

Suppose Jared Takes $200 from His Savings Account and Holds