Which of the following statements is true?
A) The currency in circulation in any economy is likely to be equal to the total money supply in the economy.
B) The currency in circulation in any economy is likely to be less than the total money supply in the economy.
C) In the United States, currency in circulation accounts for more than 50 percent of the total money supply.
D) In the United States, currency in circulation accounts for less than 1 percent of the money supply.

Question

Quizplus · Accepted Answer

The currency in circulation only includes physical currency (notes and coins) that is being used by individuals and businesses for transactions. The total money supply in an economy includes not only currency but also checks, deposits, and other forms of money that may not be in circulation at any given time. Therefore, the currency in circulation is likely to be less than the total money supply in the economy.

Which of the Following Statements Is True