If a Person Withdraws $500 from His/her Checking Account and Holds

question 171

Multiple Choice

If a person withdraws $500 from his/her checking account and holds it as currency,then M1 will ________ and M2 will ________.

• A)increase; decrease
• B)not change; not change
• C)not change; increase
• D)decrease; increase
• E)decrease; decrease

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Definitions:

Capital Inflow

The movement of funds into a country, typically in the form of investments, that can be used for further economic development.

Capital Outflow

The movement of assets out of a country, often in response to economic or political instability, seeking higher returns or safer investment climates elsewhere.

Consumer Preference

The individual tastes and choices of consumers that influence their purchasing decisions, often shaped by factors such as price, quality, convenience, and brand.

Wage Increase

An upward adjustment in the compensation that workers receive for their labor, typically as a result of negotiations, economic conditions, or to match inflation rates.