According to the U.S. Secret Service, approximately $2.6 billion of U.S. paper currency in circulation is counterfeit. Undetected counterfeit U.S. currency being held by the public both at home and abroad will impact the level of
A) the reserve ratio.
B) the money multiplier.
C) M1.
D) commodity money.

Question

Quizplus · Accepted Answer

Counterfeit currency is not considered part of the M1 money supply, as it is not a legitimate form of currency. Therefore, the presence of undetected counterfeit currency will not impact M1.