Ruby transfers $700 from her saving account to her checking account. This transaction will

Question

Quizplus · Accepted Answer

Transferring money from a savings account to a checking account does not create new money, but simply transfers existing money from one type of account to another. Therefore, this transaction will increase the money supply measure M1 (which includes checking account balances) but not affect M2 (which includes savings account balances). Option A correctly identifies this.

Ruby Transfers $700 from Her Saving Account to Her Checking