The introduction of no-load stock and bond mutual funds has made investing in stocks and bonds increasingly attractive to even the small investor. If, as a result, a large amount of money were shifted from money-market deposit funds to these stock and bond funds, how would the M1 and M2 money supply figures be affected?
A)The M2 money supply would decline; M1 would be unaffected.
B)The M2 money supply would increase; M1 would be unaffected.
C)The M2 money supply would increase; M1 would decline.
D)Both the M1 and M2 money supply figures would increase.

Question

Quizplus · Accepted Answer

The Answer of The introduction of no-load stock and bond mutual funds has made investing in stocks and bonds increasingly attractive to even the small investor. If, as a result, a large amount of money were shifted from money-market deposit funds to these stock and bond funds, how would the M1 and M2 money supply figures be affected?
A)The M2 money supply would decline; M1 would be unaffected.
B)The M2 money supply would increase; M1 would be unaffected.
C)The M2 money supply would increase; M1 would decline.
D)Both the M1 and M2 money supply figures would increase.

The Introduction of No-Load Stock and Bond Mutual Funds Has