Question

M1 includes more than just currency because

A. other assets can also be used to make transactions to buy goods and services.
B. people hold money as other stores of value such as savings accounts and money market mutual funds.
C. the federal mint makes a profit from printing currency as dollar bills.
D. the government wants to be able to quote that there is a large amount of money in the economy.

Answer 1

Answer: Option (A) is correct.

Step-by-step explanation:

Correct Option: Other assets can also be used to make transactions to buy goods and services.

M1 = Currency with public + check-able/Demand deposits + other deposits with RBI

It includes more than just currency with public because there are some other assets as well which are highly liquefied and helps people in buying goods and services.

Check able deposits is one of the component of M1, other than currency with public. People can withdraw these deposits at any point of time which people generally used make transactions for buying goods and services.