If Jane Brown closes her account at the First National Bank and uses the money instead to open a money market mutual fund accou

Question

Anon25 [30]

3 years ago

5

If Jane Brown closes her account at the First National Bank and uses the money instead to open a money market mutual fund accou

nt, what happens to M1? Why?

Business

1 answer:

dybincka [34] · Answer 1 · 2022-04-28T10:43:06+03:00

Answer: M1 doesn't change.

Explanation:

M1 consists of:

M1 = Currency with the public + Checking account + other deposits with the RBI

Money market mutual fund account is a component of monetary aggregates (M1). Therefore, M1 does not change because the funds that are going towards money market mutual funds are firstly deposited in the mutual funds bank account.

If Jane Brown closes her account at the First National Bank and uses the money instead to open a money market mutual fund​ accou

If Jane Brown closes her account at the First National Bank and uses the money instead to open a money market mutual fund accou