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Which one of the following is the largest component of the money supply (m1) in the United States:
  1. Demand and other checking deposits
  2. Gold certificates
  3. Credit cards and traveler’s check
  4. Federal reserve notes

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Chika Ilonah
Chika IlonahLv10
13 Oct 2020

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Related questions

The largest component of the money supply (M1) is:
A) gold certificates.
B) checkable deposits.
C) paper money in circulation.
D) coins

With explanations and work please!

Suppose the Federal Reserve buys 100 of mortgage-backed securities in the open market. What effect will this open market operation have on demand deposits and M1? Show all work.

Assume the required reserve ratio is 10% and the currency drain is 40%. Ignore all other complications. Thanks!

M1:

What is 'M1'

M1 is a metric for the money supply of a country and includes physical money — both paper and coin — as well as checking accounts, demand deposits and negotiable order of withdrawal (NOW) accounts. The most liquid portions of the money supply are measured by M1 because it contains currency and assets that can be converted to cash quickly. "Near money" and "near, near money," which fall under M2 and M3, cannot be converted to currency as quickly.

M1= Currency + Demand Deposits

For each of the following, state whether it is considered money in the United States. Explain why or why not.

a. A check you write against deposits you have at Bank USA.

b. Brazilian reals.

c. The available credit you have on your MasterCard.

d. Reserves held by banks at the Federal Reserve Bank.

e. Federal Reserve notes in your wallet.

f. Gold bullion.

g. Grocery store coupons

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