Final answer:
In this question, we determine whether the given items belong to M1, M2 or neither categories of money supply.
Step-by-step explanation:
In this question, we need to determine if the given items are classified as M1, M2, or neither.
- a. Your $5,000 line of credit on your Bank of America card: Neither M1 nor M2, as it is not part of the money supply.
- b. $50 dollars' worth of traveler's checks you have not used yet: Neither M1 nor M2, as it is not part of the money supply.
- c. $1 in quarters in your pocket: M1, as it is part of the money supply in the form of currency.
- d. $1200 in your checking account: M1 and M2, as it is part of the money supply in the form of demand deposits.
- e. $2000 you have in a money market account: Neither M1 nor M2, as it is not part of the money supply.