Everything else held constant,an increase in the money market fund ratio will mean ________ in the M2 money multiplier and ________ in the M2 money supply.

Question

Quizplus · Accepted Answer

An increase in the money market fund ratio means that more money is being held in money market funds, which are included in the M2 money supply. This will lead to an increase in the M2 money multiplier, which is the ratio of M2 to the monetary base. An increase in the M2 money multiplier will lead to an increase in the M2 money supply.

Everything Else Held Constant,an Increase in the Money Market Fund