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What Will Happen to the Sizes of the M1 Money

Question 43

Short Answer

What will happen to the sizes of the M1 money supply and the M2 money supply if the following transactions take place?
a. Tasha withdraws $3,000 from her checking account and holds it as currency.
b. Arturo withdraws $3,000 from his savings account and deposits it in his checking account.
c. Benjamin withdraws 3,000 from his savings account and puts it in a certificate of deposit (CD).
d. Marisol withdraws $3,000 from her home safe and deposits it in her savings account.

Correct Answer:

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a. no change to M1 and no chan...

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