If an Individual Moves Money from a Money Market Deposit

question 85

Multiple Choice

If an individual moves money from a money market deposit account to currency

• A)M1 increases and M2 stays the same.
• B)M1 stays the same and M2 increases.
• C)M1 stays the same and M2 stays the same.
• D)M1 increases and M2 decreases.

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Definitions:

Present Value

The present valuation of a series of future cash inflows or a one-time sum, based on a specified rate of return.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan balance.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, considering the time value of money.

Individual Retirement Account

A tax-advantaged investing tool that individuals use to earmark funds for retirement savings.