Assuming No Other Changes, If Checkable Deposits Decrease by $40

Assuming no other changes, if checkable deposits decrease by $40 billion and balances in money market mutual funds increase by $40 billion, the

A) M1 money supply will decline and the M2 money supply will remain unchanged.
B) M1 and M2 money supplies will not change.
C) M1 money supply will increase and the M2 money supply will remain unchanged.
D) M1 and M2 money supplies will both decline.

Correct Answer:

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