Identify whether the following items are counted in M1 only, M2 only, both M1 and M2, or neither:...

Question:

Identify whether the following items are counted in M1 only, M2 only, both M1 and M2, or neither:

A) A $1,000 balance in a checking account at a mutual savings bank.

B) A $100,000 certificate of deposit issued by a New York bank.

C) A $ 10,000-time deposit an elderly widow holds at her credit union.

D) A $50 traveler's check

E) A $50,000 money market deposit account balance

Money:

Money is anything that can be used as a medium of exchange and that it is generally acceptable by people. There are different classifications of money which includes M1, M2, etc. Money has various functions which include;

  1. Meduim of exchange.
  2. Money is used as a store of value.
  3. Money is also used as a measure of value.

Answer and Explanation:

The above money will be classified as follows;

A) A $1,000 balance in a checking account at a mutual savings bank.

This will be counted as both M1...

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What is Money? - Definition and Types

from Economics 102: Macroeconomics

Chapter 11 / Lesson 4
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