Question

As the economy weakens, one would expect investment in ____________ funds to increase and investment in _____________ funds to decrease, all else held constant.

Answer 1

As the economy weakens, it would be expected that investment in money market mutual funds to increase while that in equity fund to decrease.

• Whenever ever the economy weakens, people tends to invest in money market mutual funds since it is still considered as safe investment compare with equity fund.

• In money market mutual funds, loans usually due within a very short period of time like 90 days.

Therefore, correct terms are  money market mutual; equity.

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