Question

Classify the following items by the measure of the money supply (Check all that apply.): M1...

Classify the following items by the measure of the money supply (Check all that apply.):

M1 M2 Nether M1 nor M2
Saving deposits
Checking deposits
cash
Credit card balance

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Homework Answers

Answer #1

M1 and M2 are the measurement of money supply

M1 = currency held by the public + checkable deposit + travellers check

M1 is the narrow definition of Money supply.

M2 = M1 + Saving deposit + money market funds + certificate of deposit + other term deposit

M2 money supply is a definition of the money supply that includes everything in M1, but also adds savings deposits, money market funds, and certificates of deposit

1. Savings deposit are the part of M2 measurement of money supply

2. Checking deposit are the part of M1 and M2 measurement of money supply

3. Cash is the part of M1 and M2 measurement of money supply

4. Credit card is neither a part fo M1 and M2.

Credit card is a short term loan. It has to be repaid to the lender. It is not considered as money.

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