When people make deposits of currency into a bank,the quantity of M1
A)immediately decreases by the amount of the deposit.
B)immediately increases by the amount of the deposit.
C)does not immediately change.
D)immediately changes but whether it increases or decreases depends on whether the bank had excess reserves or did not have excess reserves.
E)changes only if the deposit is an open market operation.

Question

Quizplus · Accepted Answer

Depositing currency into a bank converts currency into demand deposits, both of which are components of M1, so the overall quantity of M1 does not change immediately.

When People Make Deposits of Currency into a Bank,the Quantity