Question

A member of management or customer service manager must approve checks written for any purchase of $100.00 to $249.99; however, only a member of management may approve checks written for $250.00 or more. a) True b) False

Answer 1

"False"Items like a line of credit are neither M1 nor M2, while traveler's checks, physical currency, and checking accounts are part of M1. Money in a money market account falls under M2 as it is less liquid than M1 assets but still accessible.

Step-by-step explanation:

The classification of money into M1 and M2 is an important concept in macroeconomics that relates to the liquidity of different types of financial assets. Here's how the following items fall into these categories:

• a. Your $5,000 line of credit on your Bank of America card is neither in M1 nor M2 because it is a form of credit, not an actual deposit or currency.
• b. $50 dollars' worth of traveler's checks you have not used yet is included in M1 because traveler's checks are considered a counterpart of cash and are included in the narrow definition of the money supply.
• c. $1 in quarters in your pocket is included in M1 because it is physical currency.
• d. $1200 in your checking account is included in M1 as it represents demand deposits that are highly liquid.
• e. $2000 you have in a money market account is included in M2 because, while it is not part of the most liquid assets (M1), it is still accessible with some restrictions and is considered part of near monies.