If an individual moves money from currency to a personal deposit account, ________.
A) M1+ decreases and M2+ stays the same
B) M1+ stays the same and M2+ increases
C) M1+ stays the same and M2+ stays the same
D) M1+ increases and M2+ stays the same

Question

Quizplus · Accepted Answer

Moving money from currency to a personal deposit account does not change the total money supply in the economy. M1 includes currency in circulation and demand deposits, while M2 includes M1 plus time deposits, savings deposits, and money market mutual funds. Since the money is moving within M1 and M2, both aggregates remain unchanged.

If an Individual Moves Money from Currency to a Personal