As the economy weakens,one would expect investment in ________ funds to increase and investment in ________ funds to decrease,ceteris paribus.

Question

Quizplus · Accepted Answer

In times of economic downturn or weakening, investors typically seek safer investment options. Money market mutual funds are considered safer because they invest in short-term, high-quality debt securities, offering more stability and liquidity compared to equity funds, which invest in stocks and are subject to greater market volatility. Hence, as the economy weakens, investment in money market mutual funds is expected to increase due to their lower risk, while investment in equity funds is expected to decrease as investors shy away from the higher risk associated with stock investments.

As the Economy Weakens,one Would Expect Investment in ________ Funds