If You Withdraw $100 from Your Checking Account and Deposit

question 115

Multiple Choice

If you withdraw $100 from your checking account and deposit it in your savings account:

• A) M1 rises and M2 falls.
• B) both M1 and M2 rise.
• C) M1 falls by $50 and M2 rises by $50.
• D) the monetary base rises.
• E) M1 falls and M2 is unchanged.

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Definitions:

Favorable Variance

A financial term indicating that actual spending was less than budgeted amounts, or revenue was higher than expected.

Fixed Overhead

Refers to the regular, static expenses of operating a business that are not affected by changes in production volume or sales.

Production Budget

A financial plan outlining the costs associated with the production process, including materials, labor, and overhead for a specific period.