What Happens to M1 and M2 Due to Each of the Following

question 30

Essay

What happens to M1 and M2 due to each of the following changes?
(a)You take $500 out of your checking account and put it into a passbook savings account.
(b)You take $1000 out of your checking account and buy traveler's checks.
(c)You take $1500 out of your money-market mutual fund and deposit into your checking account.
(d)You cash in $2000 in savings bonds and invest the money in a certificate of deposit.

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Definitions:

Decay Theory

A psychological theory proposing that memory fades and is lost over time if not used or revisited.

Interference

Interference in psychology refers to the phenomenon where memories or information can be distorted or lost because of the competition with other information.

Shallow Level Of Processing

A cognitive processing method that involves minimal attention to meaning, focusing instead on physical features like the appearance of words.

Memory Failure

The inability to recall information or experiences, ranging from temporary forgetfulness to more serious conditions like amnesia.