If Wolfgang transfers $1,000 out of his non- chequable deposit account and places it in his chequable deposit account,
A)M1 and M2 fall.
B)M1 rises and M2 remains the same.
C)M1 falls and M3 rises.
D)M1 falls and M2 rises.
E)M1 falls and M2 remains the same.

Question

Quizplus · Accepted Answer

Moving money from a non-chequable deposit account to a chequable deposit account increases M1 (which includes money in chequable deposits) but does not change M2 since both types of accounts are part of M2.

If Wolfgang Transfers $1,000 Out of His Non- Chequable Deposit