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

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Quizplus · Accepted Answer

Moving money from chequing accounts to holding it as currency does not change the total amount of money in the economy's money supply. Both actions involve forms of money that are counted in M1 (the most liquid forms of money, including currency and demand deposits). Therefore, shifting funds from one form to another within M1 does not alter the total amount of M1 or broader monetary aggregates that include M1.

If Households in the Economy Decide to Take Money Out