A series of bank runs in a country should have no effect on M1 as money simply moves from checking deposits to currency.

Question

Quizplus · Accepted Answer

Bank runs can cause a reduction in the money supply because they result in a decrease in the overall amount of deposits held in banks, which can lead to a decrease in the amount of currency in circulation. As a result, M1 (which includes currency and demand deposits) could decline if bank runs are significant enough to cause a widespread decrease in deposit levels.

A Series of Bank Runs in a Country Should Have