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If you liquidate $3,000 of your money market mutual fund and transfer the funds to your checking account, then initially, M1 will ________ and M2 will ________. Group of answer choices

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if one liquidate $3,000 of one's mutual fund and transfer them to checking account, then, the M1 will increase and M2 will not increase

Liquidation in this case refers to transfer of mutual fund to one's accessible account for personal use.

  • Let understand that M1 in money supply includes physical currency, demand deposits, checkable deposits.

  • M2 in money supply includes cash, checking deposits, easily convertible near money.

In conclusion, if one liquidate $3,000 of one's mutual fund and transfer them to checking account, then, the M1 will increase and M2 will not increase

Read more about MI, M2

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