Which of the following is considered part of the U.S. money...

Which of the following is considered part of the U.S. money supply? (Use the M1 measures.) a. A $$\$ 10$$ bill you carry in your wallet b. A $$\$ 100$$ traveler's check you bought but did not use c. A $$\$ 100$$ bill in a bank's vault d. The $$\$ 325.43$$ balance in your checking account e. A share of General Motors stock worth $$\$ 40$$

Which of the following is considered part of the U.S. money supply? (Use the M1 measures.)
a. A $$\$ 10$$ bill you carry in your wallet
b. A $$\$ 100$$ traveler's check you bought but did not use
c. A $$\$ 100$$ bill in a bank's vault
d. The $$\$ 325.43$$ balance in your checking account
e. A share of General Motors stock worth $$\$ 40$$

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Key Concepts

M1 Money Supply

M1 is a measure of the money supply that includes the most liquid forms of money. It typically consists of physical currency held by the public, demand deposits such as checking account balances, and other checkable deposits like traveler's checks. This measure is used in macroeconomics to represent money that is readily accessible for spending and transactions.

Currency in Circulation

This refers to the physical money (bills and coins) that is held by the public and not kept in bank vaults. In the context of M1, only the currency that is in the hands of the public is counted, as it represents money available for immediate transactions.

Demand Deposits (Checking Accounts)

These are bank account balances that can be accessed on-demand for spending, typically through checks or debit cards. They are included in M1 because the funds can quickly be used for transactions. Checking account balances are a core component of readily available money in the economy.

Traveler's Checks

Traveler's checks are a form of prepaid checks that can be used as a substitute for cash, particularly for travelers. They are considered part of M1 because they represent liquid assets that can quickly be converted into goods and services.

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