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Components of money supply.

Assume you decide to withdraw $100 in currency from your checking account. Illustrate what is the effect on M1? Ignore any actions the bank might take as a result of the withdrawal.

1.M1 remains unchanged.

2.B: M1 decrease by $100 as a result of lower checking deposits.

3.M1 increases by $100 as a result of additional currency in circulation.

4.None of the above occurs.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M919917

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