Author Question: Suppose Robert deposits 100 of cash into a checking account at a commercial bank. His actions will ... (Read 38 times)

crobinson2013 · **on:** Jun 29, 2018

Suppose Robert deposits 100 of cash into a checking account at a commercial bank. His actions will

A) decrease M1 by 10,000.
B) increase M1 by 10,000.
C) produce no change in M1, but M1 will decrease in the future because the bank has excess reserves.
D) produce no change in M1, but M1 will increase because the bank has excess reserves.

Question 2

Checking account deposits are counted in M1, but savings account deposits are not because

A) checking deposits can be used for payment; cash in savings cannot.
B) checking deposits are a form of consumption; savings deposits are a form of investments.
C) Trick question Neither type is counted in M1.
D) Trick question Both deposit types are counted in M1.