If the amount of money market funds increases, banks must hold extra reserves.

Name: If the amount of money market funds increases, banks must hold extra reserves.
Brand: Quizplus
Rating: 4.9 (47 reviews)

Question

Quizplus · Accepted Answer

Money market funds are investment vehicles that are not part of the banking system, so changes in their amounts do not directly affect the reserve requirements of banks. Reserve requirements are determined by central banks and are based on the deposits held by banks, not on the amount of money market funds.

If the Amount of Money Market Funds Increases, Banks Must