Suppose that Bob had $500 in travelers checks unused from his trip to Italy and he decides to deposit the checks to his savings account. This transaction will:

Question

Quizplus · Accepted Answer

Travelers checks are not included in M1 as they are not considered as currency. Hence, depositing travelers checks into a savings account will decrease the amount of M1 but will not affect M2 as savings accounts are part of M2.

Suppose That Bob Had $500 in Travelers Checks Unused from His