Which measure of money would we most likely use if we were interested in looking at spending in the economy?
A) Hard money
B) M1
C) M2
D) Reserves.

Question

Quizplus · Accepted Answer

M1 is the measure of money that includes physical currency, checking account deposits, and traveler's checks. This is the best measure to use when looking at spending in the economy because it includes the most liquid and readily accessible forms of money that people can use to make purchases. M2 includes additional forms of money, such as savings account deposits and money market funds, that are less likely to be used for day-to-day spending.

Which Measure of Money Would We Most Likely Use If