Suppose that you decide that you no longer want to hold currency, ...

[Zulu123]

Suppose that you decide that you no longer want to hold currency, and deposit all of your currency holdings to your checking account. What is the immediate or initial impact of this transaction on M1 and M2?
 
  What will be an ideal response?

Question 2

Despite the improvements in information technology, productivity growth since 2006 has fallen to an even lower rate than during the period of slow growth from the mid-1970s to the mid-1990s.
 
  Indicate whether the statement is true or false

[ryhom]

Answer to Question 1

Neither M1 nor M2 will change (at least not initially). Both checking account balances and currency holdings outside commercial banks are included in M1 and in M2. The decrease in currency holdings is perfectly offset by the increase in checking account balances.

Answer to Question 2

FALSE

[Zulu123]

YES! Correct, THANKS for helping me on my review

[tandmlomax84]

Gracias!