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tangare [24]
4 years ago
9

If you withdraw $100 from your checking account and put it in your savings account,

Advanced Placement (AP)
1 answer:
Inga [223]4 years ago
7 0

M1 includes cash and checking deposits. 

M2<span> includes all elements of M1 as well as "near money (savings deposits, money market securities, mutual funds, and other time deposits)</span>

 In our example, M1=100 is transferred to M2.

<span>When you  withdraw $100 from checking account and put it in your savings account, the following are true: 
A. M1 decreases by $100. 
B. M2 increases by $100. 
C. M1 decreases by $100 and M2 increases by $100. 
E. there is no immediate change in the money supply.</span>

<span>While D. M2 decreases by $100 and M1 increases by $100 is not true.</span>

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