If you transfer all of your currency to your demand deposit account, then initially, M1 will ________ and M3 will ________.
A)increase; not change
B)not change; increase
C)not change; not change
D)decrease; increase

Question

Quizplus · Accepted Answer

Transferring currency to a demand deposit account does not change the total amount of money in the economy; it merely shifts money from one form (currency) to another (demand deposits), both of which are components of M1. M3, a broader measure of money supply, also remains unchanged as it includes M1.

If You Transfer All of Your Currency to Your Demand