ndicate thespecific net effect on M1 and M2 (increase, decrease, no change) due to each of the followingevents. Consider each lettered event to be independent of the others.

a) You take the $2,500 out of the shoe box in your closet and use it to pay off your car loan with the bank.

M1___ M2___

b) Higher market interest rates cause the public to move $125b from their savings accounts to their money market deposit accounts.

M1___ M2___

c) Increased default risk causes banks to have a net decrease in their lending of $325b this year.

M1___ M2___

d) The Federal Reserve sells $40b in U.S. Treasury instruments to commercial banks.

M1___ M2___

e) An individual in the United States receives $25,000 cash (in $100 bills) from a Mexican drug lord forsuccessfully transporting illegal drugs across theborder fromMexico to the United States.Shedeposits the cash into her savings account.

M1___ M2___

f)You redeem a U.S. Savings bond and deposit the funds in your savings account.

M1___ M2___