When a person withdraws $500 from his/her checking account and holds it as currency, then m1 will increase and m2 will not change.
It should be noted that money supply simply means the amount of money that is in circulation at a particular period of time.
It should be noted that m1 and m2 indicates money supply.
Therefore, when a a person withdraws $500 from his/her checking account and holds it as currency, then m1 will increase and m2 will not change.
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