A depositor moves money out of a checking account into a three year fixed deposit at the same bank. What happens to M1 and to M2?

1. M1 is the readily available money, which is currency plus demand deposits. 2. The checking balance was a demand deposit, so moving it out reduces M1 by the amount transferred. 3. M2 is all of M1 plus time deposits and other money that is not immediately accessible. 4. The money has landed in a three year fixed deposit, which is a time deposit and therefore already inside M2. 5. One component of M2 has fallen and another has risen by the same amount, so the M2 total is unchanged. 6. The trap is answering that both measures move together. Only the narrow measure reacts, because the money never left M2. 7. M1 rising is impossible here, since nothing was moved into currency or into a chequable balance. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 15 "Understanding Money and Financial Institutions", section 15.1 Show Me the Money_