Suppose You Cash in a Certificate of Deposit (A Small

question 524

Multiple Choice

Suppose you cash in a Certificate of Deposit (a small time deposit) to acquire the traveler's checks you'll need for your vacation. What happens to M1 and M2?

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

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Definitions:

Simple Contracts

Contracts that can be oral or written, not formalized by seal, and recognized by courts if they meet basic requirements like offer, acceptance, and consideration.

Negotiable Instruments

Written documents guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payer usually not named.

Assignee

The party to whom rights or property are legally transferred through an agreement or contract.

Holder

An individual or entity that legally possesses a document, such as a check, note, bill of exchange, or share of stock.