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

question 11

Multiple Choice

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.

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