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Suppose You Withdraw $1,000 from Your Savings Account and Put

question 65

Essay

Suppose you withdraw $1,000 from your savings account and put it in your checking account.Briefly explain how this will affect M1 and M2.


Definitions:

Cash Concentration Accounts

These are accounts used by companies to concentrate cash from multiple accounts into a single account for effective cash management.

Cash Management

The process of collecting, managing, and investing a company's cash in a way that optimizes its liquidity and profitability.

Lock-box System

A collection and processing service provided by banks to speed up the receipt and deposit of checks from customers.

Disbursement Float

The time delay between when a check is issued and when it is deducted from the payer's bank account.

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