When Cash Is Withdrawn from a Checkable-Deposit Account at a Bank

question 241

Multiple Choice

When cash is withdrawn from a checkable-deposit account at a bank,

• A) the money supply M1 increases.
• B) the money supply M1 decreases.
• C) the money supply M1 does not change, but its composition changes.
• D) the composition of money supply M1 does not change.

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Definitions:

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from the production and consumption of goods and services.

Exports

Items or services manufactured in one nation and marketed to purchasers in another.

World Price

The global market price of a product or service, determined by worldwide conditions of supply and demand.

Importer or Exporter

A person or company that brings goods into (importer) or sells goods to other countries (exporter) as part of international trade.