1. Loans and deposits within a bank are:

are not found on a bank’s balance sheet.

liabilities and assets, respectively, on a bank’s balance sheet.

both liabilities.

assets and liabilities, respectively, on a bank’s balance sheet.

both assets.

2. If Anna were to convert some of her checkable deposits into a (small denomination) certificate of deposit, which of the following changes would take place?

M1 would decrease; M2 would decrease.

There would be no changes to M1 or M2.

M1 would decrease and then increase; M2 would increase and then decrease.

M1 would decrease; there would be no change in M2.

M1 would increase; M2 would increase.