If a person cashes in a $500 Canada Savings Bond and puts it in his/her chequing account, then M1+ will ________ and M2++ will ________.

Question

Quizplus · Accepted Answer

When a person cashes in a savings bond and puts it in their checking account, M1+ (money supply that includes physical currency, demand deposits, and traveler's checks) will increase as this transaction increases demand deposits. However, M2++ (money supply that includes M1+ plus savings deposits, time deposits, and money market funds) will decrease as the savings bond is no longer counted towards M2++.

If a Person Cashes in a $500 Canada Savings Bond