Question

If you take $100 out of your piggy bank and deposit it in your checking account, how did M1 change? Did M2 change? Assuming that there are no new loans created from the deposit.\

Answer 1

Neither changed

Step-by-step explanation:

Based on the information given, if you decide to take the amount of $100 out of your piggy bank and deposit the amount in your checking account this means that neither M1 nor M2 changed, what only changed was the form of M1, therefore based on these you will have less availability of money or cash but have a larger checking account which allows you to make withdrawals and as well as deposits.