If you have kept savings in a retail money market fund, and you withdraw funds that are then deposited in your checking account, which of the following is true? Both M1 and M2 decrease. Both M1 and M2 increase. M1 stays the same and M2 increases. O M1 increases and M2 stays the same.

If you have kept savings in a retail money market fund, and you withdraw funds that are then deposited in your checking account, which of the following is true? Both M1 and M2 decrease. Both M1 and M2 increase. M1 stays the same and M2 increases. O M1 increases and M2 stays the same.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter27: Money And Banking

Section: Chapter Questions

Problem 29P: If you take 100 out of your piggy bank and deposit it in your checking account, how did M1 change?...

See similar textbooks

Related questions

Q: Which of the following is included in M2 but not included in M1?

A: M1 is a measure of money supply which includes: 1. Coins and Currency in Circulation 2. Checkable…

Q: Which of the following is included in M2, but not included in M1 Lütfen birini seçin: O A. savings…

Q: Type of deposit/aggregate Amount (Rbn) Bank notes and coins 57 Short term deposits 82 Cheques and…

A: "Since you have asked a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Consider an individual who moves to Canada and brings with him his life savings of $60,000, which he…

A: Given the amount deposited in the Canadian bank = $60000 The overall change in deposits =? The…

Q: What is the maximum amount of money created from a $3 million deposit in the banking system if the…

A: Given information - Deposits = $3 million Required reserve ratio = 0.05 The maximum amount of money…

Q: Given the following information, what are the values of M1 and M2? Small time deposits $750 billion…

A: The measure which depicts the commodity that is in turn being accepted as a medium of economic…

Q: If the required reserve ratio is 0.20 or 20%, what is the money multiplier? 10 1.25 4 5 10000

A: Answer is given below

Q: How are bananas used as a form of money in Bananatown? A. Bananas function as a unit of account and…

A: Money refers to the medium of exchange. Money is accepted as payments for goods and services in an…

Q: Suppose the required reserve ratio is 20%. What is the maximum amount of total money supply that can…

Q: 1. When someone moves money from a saving account to a demand deposit, the size of M1 will: a.…

A: M1 cash supply incorporates those monies that are extremely fluid like money, checkable (request)…

Q: When our children were young, we saved their personal funds like cash birthday gifts in savings…

A: M1 is the measure of money which includes the following - M1 = Cash + Checking Deposits + Demand…

Q: 1.3 Suppose that you decide that you no longer want to hold currency, and deposit all of your…

A: To answer this question, first we have to look at the definitions of M1 and M2.

Q: Calculate M1 if M3 is $20,000 and net time deposit with banks is $17,000

A: The data presented in the question above is:- M3 = $20,000 Net time deposit with banks = $17,000 We…

Q: In Chapter 11 you learned about fractional-reserve banking. A fractional-reserve banking system…

A: Assume that no bank hold excess reserves and no people hold out money from their loans. Also, given…

Q: What is the largest component of M1 money supply? a.Travelers checks b.Demand deposits c.Coin…

A: Money supply refers to all the currency and other liquid monetary instruments in a country’s economy…

Q: If you take $100 out of your piggy bank and deposit it in your checking account, how did M1 change?…

A: The money supply represents the total stock of money that is available in an economy. It can be…

Q: Calculate net time deposit with banks if M3 is $25,000 and M1 is $11,000

A: Money Supply: - In an economy, the total value of money in circulation at a point in time is known…

Q: Calculate the value of M2 given that the M1 measure of money supply is $85,000 and saving deposit…

A: The data presented in the question is:- M1 measure of money supply = $85,000 Savings deposit with…

Q: Q.9 What is the difference between M1 and M2 definition of the money supply?

Q: Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess…

A: Given, total deposits = $1,800,000 required reserve ratio = 25% Assets Amount Liabilities Amount…

Q: In an economy, the M2 measure of money supply is $88,000 and M1 is $66,000 We have to calculate…

A: The information being given is:- M2 = $88,000 M1 = $66,000 Saving deposit with post office Savings…

Q: Assume that Jimmy Cash has $ 2,000 in his checking account at Folsom Bank and uses his checking…

A: M1 is a measure of money supply which includes cash in hand and coin which are in circulation in the…

Q: Assuming initially that the required reserve ratio = 15%, the currency-deposit ratio = 40%, and the…

Q: Decisions for Tomorrow How much does M1 and M2 change in the following situations? a. $300 is…

A: In an economy, M1 money supply includes all the monetary instruments that are readily available to…

Q: The net time deposit with banks is $400 million and the M1 component of money supply is $870 million…

A: M3 is a measure of money supply that includes time deposits , money market funds and liquid assets…

Q: If you take $100 out of your piggy bank at home and deposit it into your checking account, how did…

A: M1 is the summation of currency in circulation, a demand deposit, travelers check, and other…

Q: L consists of M2 plus all other products that may be transferred into money. Lis the most liquid…

A: One definition of a liquid asset is readily convertible into money. Cash is the most significant…

Q: Calculate M2 if in the Economy is M1 is $10,000 million and Savings deposit with post office is…

A: The information being given is:- M1 = $10,000 Savings deposit at post office = $7700 We have to…

Q: Suppose an individual deposits $1,500 into her chequing account, which eventually leads banks to…

A: The reserve ratio is the percentage of checkable deposits held as reserves by the commercial banks.…

Q: 1.4 Suppose you transfer $4,000 from your money market mutual fund account to your checking account.…

A: 1.4) M1 and M2 are the measures of money supply where M1 is the narrow money.

Q: If you use an online payment system such as PayPal topurchase goods or services on the Internet,…

A: M1 is the most liquid form of measure of money. It includes currency in hand, demand deposits and…

Q: Given an initial deposit of $30,000 and a legal reserve requirement of 15%, what is the amount of…

A: Banks make new money whenever they make credits. .At the present time, this cash (bank stores) makes…

Q: 7. John transfers $150 from his money market fund to his checking account. This transaction…

A: Given:Checking account=Cheackable deposit=$150

Q: 19) Which of the following is a function that money serves? A) medium of exchange B) unit of value…

A: Anything that is used as an acceptable means of payment and for daily transactions can be considered…

Q: The required reserve ratio is 12.5%. The money multiplier is Select one: a. 2.5. Ь. 6. C. 7.5. d. 8.

A: Money multiplier: It explains how an initial deposit results in a greater final increase in the…

Q: You sell $10,000 of money market mutual fund shares and deposit them in a checking account with a…

A: M1 is a narrower concept which includes currency in circulation ie the coins and notes with public…

Q: 18. If the required reserve ratio is 15 percent, currency in circulation is $400 Billion, checkable…

A: here we calculate the M1 Multiplier which are as follow-

Q: In Billions $600 $700 $500 Item Dollars Checkable Deposits Small Time Deposits Currency Money-Market…

A: Money supply M1 consists of the currency in circulation, checkable deposits (both current and saving…

Q: Identify whether each of the following examples belongs in M1 or M2. If an example belongs in both,…

A: The commodity that is accepted as a medium of exchange in the market is known as money. It is used…

Q: When $100 is deposited in the banking system, it leads to maximum expansion in bank deposits of…

A: Here, given information is: Change in deposits: $100 Maximum change in money supply: $1,000 To…

Question

If you have kept savings in a retail money market fund, and you withdraw funds that are then
deposited in your checking account, which of the following is true?
Both M1 and M2 decrease.
Both M1 and M2 increase.
M1 stays the same and M2 increases.
O M1 increases and M2 stays the same.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

If you take 100 out of your piggy bank and deposit it in your checking account, how did M1 change? Did M2 change?
What is the difference between M1 and M2? Why aren’t M1 and M2 just combined?
If you take $100 out of your piggy bank at home and deposit it into your checking account, how did the value of M1 change? How did the value of M2 change as a result of your deposit?
Question 2 Jaime transfers $2,500 from his checking account to his savings account. This transaction will Select one: a. decrease both M1 and M2. b. increase both M1 and M2. C. decrease M1 and not change M2. d. not change M1 and decrease M2.
You sell $10,000 of money market mutual fund shares and deposit them in a checking account with a bank. What is the effect on M1 and M2?
Determine whether each of the following is included in both M1 and M2 or M2 only: a. a Connecticut quarter b. a savings account at a local savings bank c. a share draft account at a credit union d. money market deposit accounts e. American Express travelers’ checks
John withdraws $ 100 from his checking account and deposits it in his savings account. What will be the effect of this Transaction on different measures of money, i.e. C, M1, and M2?
What is M1, M2 and M3
What does m1,m2 m3 include in detail ??
Calculate M2 if M1 is $3600 million and the Savings deposit with post office Savings bank is $5000 million
7. John transfers $150 from his money market fund to his checking account. This transaction will: decrease M2 and increase M1. increase M1, but leave M2 unchanged. decrease M1 and increase M2. decrease both M1 and M2.
John Antonio transfers $5000 from his checking account to his savings account. How are M1 and M2 affected by this decision? a.M1 increases and M2 decreases b.M1 and M2 remain the same c.M1 decreases and M1 increases d.M1 increases and M2 increases e.M1 decreases and M2 decreases