M1 is composed of
A)currency held by individuals and businesses,traveler's checks,and checkable deposits owned by individuals and businesses.
B)checkable deposits owned by individuals and businesses,saving deposits,and certificates of deposit.
C)currency inside of banks,traveler's checks,and government-issued checks.
D)traveler's checks,credit cards,and e-cash.
E)currency held by individuals and businesses,traveler's checks,and the credit line on credit cards.

Question

Quizplus · Accepted Answer

M1 is defined as the most liquid form of money, which includes currency held by individuals and businesses, traveler's checks, and checkable deposits owned by individuals and businesses. Choice B includes savings deposits and certificates of deposit, which are not as liquid as checkable deposits and currency. Choice C includes currency inside banks, which is not considered part of M1 because it is not accessible to individuals and businesses. Choice D includes credit cards, which are not considered part of M1 because they represent a line of credit rather than actual money. Choice E includes credit line on credit cards, which is not considered part of M1, as explained above.

M1 Is Composed of