If Joe transfers $1,000 from his savings account to his checking account and assuming that banks cannot lend this money, then:a. M1 will remain the same. b. M2 will increase by $1,000. c. M1 will increase by $1,000. d. M1 will increase by $1,000, and M2 will decrease by $1,000.

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Yaretzi Baird

31 March, 10:54

If Joe transfers $1,000 from his savings account to his checking account and assuming that banks cannot lend this money, then:a. M1 will remain the same. b. M2 will increase by $1,000. c. M1 will increase by $1,000. d. M1 will increase by $1,000, and M2 will decrease by $1,000.

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Veronica Leach · Answer 1

C

Explanation:

Mi money are highly liquid financial assets like checking account, cash and traveler's check while the M2 money are not as liquid when compared to M1, Example is, in addition to M1, savings, money market fund and certificates of deposit.

This means that whatever that impacts M1 will also impact M2.

Therefore, the transfer of $1000 for savings account will increase M1 by $1000.