Yolanda Took $5,000 from Her Checking Account and Put the Money

question 227

Multiple Choice

Yolanda took $5,000 from her checking account and put the money in her savings account at the same bank. Based on that information, which of these is true?

• A) Both M1 and M2 were reduced by $5,000.
• B) M1 went down by $5,000, but M2 was unchanged.
• C) Neither M1 nor M2 changed because the transfer was done at the same bank.
• D) M1 and M2 both rose by $5,000.

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Definitions:

Incremental Cost

The additional cost that is incurred by producing one more unit of a good or service.

Opportunity Cost

This represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Book Value

The net value of a company's assets minus its liabilities, as recorded on the balance sheet, often compared to its market value.

CCA Depreciation

CCA Depreciation, or Capital Cost Allowance depreciation, is a method of depreciation used for tax purposes in Canada, allowing businesses to deduct the cost of capital assets over a period of time.