Consider the following developments which happened at the same time: Households reduced their currency holding in favor of bank deposits by $1 million and the Fed purchased a $1 million Treasury Bill from the U.S. Government. What is the immediate or initial effect of these two actions on the money supply (M2)? A) M2 will increase by $1 million B) M2 will remain the same C) M2 will decrease by $1 million D) M2 will increase by $2 million

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why is the answer a here? Which action doesn't factor into the money supply? 1.13. Consider the following developments which happened at the same time: Households reduced their currency holding in favor of bank deposits by $1 million and the Fed purchased a $1 million Treasury Bill from the U.S. Government. What is the immediate or initial effect of these two actions on the money supply (M2)? A) M2 will increase by $1 million B) M2 will remain the same C) M2 will decrease by $1 million D) M2 will increase by $2 million
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