Suppose Individuals Decide to Reduce Their Holdings of Money Market

question 12

Multiple Choice

Suppose individuals decide to reduce their holdings of money market funds.Further assume that these decisions put funds into checkable deposits.Given this information,we know that

• A)the demand for M1 would increase and the demand for M2 would decrease.
• B)the demand for M1 would decrease and the demand for M2 would decrease.
• C)the demand for M1 would increase and the demand for M2 would increase.
• D)the demand for M1 would decrease and the demand for M2 would increase.
• E) none of the above

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Definitions:

Debt Ratio

The Debt Ratio is a financial metric that compares a company's total liabilities to its total assets, showing the proportion of a company's assets financed by debt.