1. When someone moves money from a saving account to a demand deposit, the size of M1 will: a. increase c. remain the same b. decrease d. none of the above 2. When someone moves money from a saving account to a demand deposit, the size of M2 will: a. increase c. remain the same b. decrease d. none of the above

1. When someone moves money from a saving account to a demand deposit, the size of M1 will: a. increase c. remain the same b. decrease d. none of the above 2. When someone moves money from a saving account to a demand deposit, the size of M2 will: a. increase c. remain the same b. decrease d. none of the above

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.2P

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K Pedro takes $200 from his money market fund and deposits the $200 in his checking account. What is the immediate change in M1 and M2? A. M1 increases and M2 decreases by $200. B. M1 increases by $200 and M2 does not change. C. M1 does not change and M2 does not change. D. M1 decreases and M2 increases by $200. E. Both M1 and M2 decrease by $200.
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Assume that Elike raises $5,000 in cash from a yard sale and deposits the cash in his checkingaccount at the Bank of Uchenna. By how much does the money supply immediately change as aresult of like's deposit?
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