Portfolio choice is concerned with decisions about:

in what forms we want to hold assets and liabilities.
how much to spend or save.
how to finance our consumption spending.
the level of tax rates that the government should set on income.


Jane Doe withdraws $100 from her savings account at her bank. What effect will this have on HER balance sheet?

Increase cash holdings on the asset side and decrease savings deposits on the liability/NW side
Increase cash holdings on the asset side and decrease savings deposits on the asset side
Increase cash holdings on the liability/NW side and decrease savings deposits on the liability/NW side
Increase cash holdings on the liability/NW side and decrease savings deposits on the asset side


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