Final answer:
True, outstanding checks are checks that haven't been presented to the bank for payment. The breakdown of the M1 and M2 components indicates which items are considered liquid money and which are not. Lastly, the Panic of 1819 decreased faith in the Second Bank of the US.
Step-by-step explanation:
The student's question is about whether outstanding checks are checks that have not yet been presented to the bank for payment. The answer is a) True. Outstanding checks are indeed checks that the payee has not yet deposited or that the bank has not yet processed.
M1 and M2 Components
M1 and M2 are measures of the money supply in an economy. M1 includes the most liquid forms of money, such as cash and checking account balances, while M2 includes M1 plus near-money assets that are not as liquid as M1 but can be quickly converted into cash or checking deposits. Here's a breakdown of the items provided:
- a. Your $5,000 line of credit on your Bank of America card - Neither M1 nor M2, as it represents potential borrowing, not actual money.
- b. $50 dollars' worth of traveler's checks you have not used yet - M1, as traveler's checks are a part of the demand deposit component and are easily used for transactions.
- c. $1 in quarters in your pocket - M1, since this is physical currency and readily usable for transactions.
- d. $1200 in your checking account - M1, as funds in checking accounts are part of demand deposits and are readily accessible for spending.
- e. $2000 you have in a money market account - M2, because money market accounts are included in M2 as they can quickly be converted into cash or checking deposits, although they're not as liquid as those in M1.