If people withdraw $1,000 from the nation's money market mutual funds and redeposit the funds in various checkable and debitable accounts, then

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M1 includes forms of money that are readily available for transactions, such as currency and checking accounts. Moving money from money market mutual funds (which are part of M2 but not M1) into checkable and debitable accounts increases M1. M2 includes M1 plus savings accounts, small-denomination time deposits, and money market mutual funds. Since the funds are moved within the components of M2, the total M2 remains unchanged.

If People Withdraw $1,000 from the Nation's Money Market Mutual