Components of money supply

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Suppose you decide to withdraw $100 in currency from your checking account. What is the effect on M1? Ignore any actions the bank might take as a result of the withdrawal.

1. M1 remains unchanged.

2. B: M1 decrease by $100 as a result of lower checking deposits.

3. M1 increases by $100 as a result of additional currency in circulation.

4. None of the above occurs.

Reference no: EM1313593

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