Sam has $500 in traveler's checks. He cashes a $100 traveler check, deposits $150 into his checking account at a Savings and Loan Association, and deposits the remaining $250 into a savings account at a credit union. Immediately, _.

Question

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M1, which includes traveler's checks, decreases by $250 due to the deposit into the savings account at the credit union. However, M2, which includes M1 and other less liquid forms of money, does not change since the deposit into the credit union savings account does not affect M2.

Sam Has $500 in Traveler's Checks