Chapter 11, Problem 10Q

To determine

The effects would have on the size of the money market mutual funds, if reserve requirements were eliminated in the future, as some economists advocate.

Concept Introduction:

Money market mutual funds can be used to write checks. These are shares of, usually $1 which are redeemable at a fixed price. The funds deposited in the money market account are invested in short-term money market securities like the Treasury bills, certificates of deposit, and commercial papers. These funds provide with money market interest payments. Money market mutual funds are not subject to reserve requirements as they are not legal deposits.