Suppose your bank lowers its minimum balance requirement by $500. So you take $500 out of your checking account and put it into a money market deposit account. What is the overall effect on M1 and M2?

M1 falls by $500, M2 rises by $500

M1 is unchanged, M2 is unchanged

M1 falls by $500, M2 is unchanged

M1 is unchanged, M2 rises by $500