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9 January, 12:32

Jane currently has $5,000 in her savings account and $2,000 in her checking account at the local bank. Instructions: Use a positive number to represent an increase and a negative number to represent a decrease. a. Suppose she withdraws $400 in cash from her savings account. By what dollar amount does the country's money supply (M1 and M2) change as a result of Jane's actions

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  1. 9 January, 15:13
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    Change in M1 $400

    Changd in M2 $0

    Explanation:

    The money which is been held by individuals in savings accounts is part of the M2 money supply, but its not part ofthe M1 money supply.

    Hence when Jane withdraws $400 cash from her savings account, the M1 money supply will increases by $400. However, the M2 money supply does not tend to change reason been that the M1 money supply is included as part of the M2 money

    Change in M1 $400

    Changd in M2 $0
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