If you withdraw currency from your savings account, you are
A) increasing M1, decreasing M2.
B) increasing both M1 and M2.
C) increasing M1 but not affecting M2.
D) decreasing both M1 and M2.

Question

Quizplus · Accepted Answer

When you withdraw currency from your savings account, you are increasing M1 because you are taking out cash which is a component of M1 (currency in circulation). However, this does not affect M2 which includes M1 as well as other types of deposits like savings deposits, time deposits, etc.

If You Withdraw Currency from Your Savings Account, You Are