Question

If Ms. Anniston transfers $1,000 from her checking account to her savings account, then__________.

a. M1 falls and M2 remains the same.
b. M1 falls and M2 rises.
c. both M1 and M2 rise.
d. M1 remains the same and M2 rises.

Answer 1

a. M1 falls and M2 remains the same.

Step-by-step explanation:

in money supply M1 stand for the most liquid forms: currency, coins, traveler check, checking account

while M2 is M1 + near money wich are saving account, time deposit among other

Thus, Ms Anniston make M1 fall while M2 remains the same