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AP® Macroeconomics

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Moderate

Measures of Money after Withdrawal

APMACR-DZJVBI

Assume the Federal Reserve has set the required reserve ratio for commercial banks at 10%. Ivana Dolar goes to the local branch of her bank and withdraws $100 from her checking account. Which of the following statements about the impact on the money supply is NOT true?

A

The M0 measure of the money supply increases by $100.

B

The M1 measure of the money supply increases by $100.

C

The M1 measure of the money supply is unchanged.

D

The M2 measure of the money supply is unchanged.

E

The M3 measure of the money supply is unchanged.