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If $5 Million Is Withdrawn from Money Market Deposit Accounts

Question 14

Multiple Choice

If $5 million is withdrawn from money market deposit accounts and is used to purchase traveler's checks, then


A) M1 will increase by $5 million and M2 will remain unchanged.
B) M1 will increase by $5 million and M2 will decrease by $5 million.
C) M1 will decrease by $5 million and M2 will increase by $5 million.
D) M1 will remain unchanged and M2 will decrease by $5 million.

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