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If Households in the Economy Decide to Take Money Out

Question 28

Multiple Choice

If households in the economy decide to take money out of demand deposit accounts and put this money into long-term savings accounts, this will:


A) decrease M1 and increase M3.
B) decrease M1 and increase broad money.
C) decrease M1 and not change M3.
D) increase M1 and decrease M3.

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