If households in the economy decide to take money out of checking account deposits and hold it as currency,this will initially

Question

Quizplus · Accepted Answer

Moving money from checking accounts to holding it as currency does not change the total amount of money in the economy. Both currency and checking account deposits are components of M1 (and M2), so shifting money between these forms does not alter the total amounts of M1 or M2.

If Households in the Economy Decide to Take Money Out