Question

M1 includesA) currency in circulation, savings account balances, checking account deposits in banks, and holdings of traveler's checks.B) currency in circulation, checking account deposits in banks, and holdings of traveler's checks.C) currency in circulation, savings account balances, and checking account deposits in banks.D) coins, savings account balances, traveler's checks.

Answer 1

The correct answer is option B.

Step-by-step explanation:

M1 is the most narrow definition of money. It includes currency and near money. Near money are those assets which are easily encashable.

So M1 will include currency coins and notes, checkable deposits and traveler's checks.

Savings account deposits is included in M2, which is slightly broader than M1.