If you liquidate $3,000 of your money market mutual fund and transfer the funds to your checking account,then initially,M1 will ________ and M2 will ________.

Question

Quizplus · Accepted Answer

BTransferring funds from a money market mutual fund to a checking account increases M1 because checking accounts are part of M1. M2 includes M1 and other assets like money market mutual funds, so the total amount of M2 does not change; it's just redistributed within its components.

If You Liquidate $3,000 of Your Money Market Mutual Fund