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Suppose your bank raises its minimum-balance requirement for free checking on checking accounts by $300. You take $500 out of your passbook savings account and put $300 in your checking account, and $200 in your wallet. What is the overall effect on M1 and M2? Select one: a. M1 rises by $300, M2 falls by $500. O b. M1 is unchanged, M2 is unchanged. O c. M1 rises by $500, M2 is unchanged. O d. M1 rises by $500, M2 falls by $500.

Suppose your bank raises its minimum-balance requirement for free checking on checking accounts by $300. You take $500 out of your passbook savings account and put $300 in your checking account, and $200 in your wallet. What is the overall effect on M1 and M2? Select one: a. M1 rises by $300, M2 falls by $500. O b. M1 is unchanged, M2 is unchanged. O c. M1 rises by $500, M2 is unchanged. O d. M1 rises by $500, M2 falls by $500.

ECON MACRO
ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 2.3P
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Suppose your bank raises its minimum-balance requirement for free checking on checking accounts by $300. You take $500 out of your passbook savings account and put $300 in your checking account, and $200 in your wallet. What is the overall effect on M1 and M2? Select one: a. b. M1 is unchanged, M2 is unchanged. M1 rises by $500, M2 is unchanged. d. M1 rises by $500, M2 falls by $500. M1 rises by $300, M2 falls by $500. C.
Transcribed Image Text:Suppose your bank raises its minimum-balance requirement for free checking on checking accounts by $300. You take $500 out of your passbook savings account and put $300 in your checking account, and $200 in your wallet. What is the overall effect on M1 and M2? Select one: a. b. M1 is unchanged, M2 is unchanged. M1 rises by $500, M2 is unchanged. d. M1 rises by $500, M2 falls by $500. M1 rises by $300, M2 falls by $500. C.
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