Which of the following is included as part of the M1 money supply?
A) $200,000 balance in the checking account of Main Street Trading Corp.
B) $200,000 in reserves held by Main Street Commercial Bank in its vaults
C) $2 million balance in the checking account of the U.S. Treasury
D) $200 million in the vaults of the Federal Reserve Banks

Question

Quizplus · Accepted Answer

The M1 money supply includes currency in circulation, demand deposits (checking accounts), and other checkable deposits, which would include the $200,000 balance in the checking account of Main Street Trading Corp.

Option B is incorrect because reserves held by a bank are not considered part of the M1 money supply.

Option C is incorrect because while the U.S. Treasury has a substantial balance in its checking accounts, these accounts are not considered part of the M1 money supply.

Option D is incorrect because reserves held by the Federal Reserve Banks are not part of the M1 money supply.

Which of the Following Is Included as Part of the M1