Suppose that Leonardo uses $2,000 from his checking account at his bank, Manhattan Bank, and opens a new small time deposit account (certificate of deposit). How does this transaction impact the amounts of M1 and M2?
Added by Raymond M.
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- M1 includes the most liquid forms of money, such as cash, demand deposits (checking accounts), and other liquid assets. - M2 includes all of M1 plus near-money assets, such as savings accounts, time deposits (like certificates of deposit), and money market Show more…
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