Other Things Constant, Which of the Following Would Cause the M1

question 42

Multiple Choice

Other things constant, which of the following would cause the M1 money supply to decline?

• A)an increase in the quantity of U.S.currency held overseas
• B)a shift of funds from interest-earning checking deposits to money market mutual funds
• C)a reduction in the general public's holdings of currency outside of banks because debit cards have become more popular and widely accepted
• D)a shift of funds from money market mutual funds into stock and bond mutual funds because the fees to invest in the latter have declined

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Definitions:

Profitability Ratios

Financial metrics used to evaluate a company's ability to generate profit relative to its revenue, assets, equity, or other financial metrics.

Operating Income

The profit realized from a business's operations after subtracting operating expenses from gross income.