Suppose That You Decide That You No Longer Want to Hold

question 58

Essay

Suppose that you decide that you no longer want to hold currency. You transfer all of your currency holdings to your cheque account. Carefully explain how this affects M1.
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Definitions:

Cash Cycle

The period of time between a company's purchase of inventory and the receipt of cash from accounts receivable.

Operating Cycle

The duration of time from the purchase of inventory to the collection of cash from sales, reflecting the efficiency of a company's operations.

Cash Flow Time Line

Graphical representation of the operating cycle and the cash cycle.

Cash Cycles

The process that covers the time span between a company’s outlay of cash for materials and the collection of cash from customers for goods or services sold.