Final answer:
Currency is represented by physical forms of money, specifically coins and bills (option B: bills and coins), as opposed to non-physical forms such as stocks, bonds, or demand deposits. The M1 money supply includes both physical currency and checkable deposits.
Step-by-step explanation:
The student has asked about the forms of cash represented by currency. Currency, in the context of an economic system, typically includes coins and currency in circulation, such as the coins and bills that are used as a medium of exchange that are not held by the U.S.
Treasury, at the Federal Reserve Bank, or in bank vaults. While stocks and bonds, commercial paper, and demand deposits can be related to finance, they do not constitute physical currency. Therefore, the correct answer in this context is B. bills and coins.
It is worth noting that currency, along with checkable deposits (also known as demand deposits - the amounts held in checking accounts), form part of the M1 money supply, which is a classification of money that the Federal Reserve System measures daily. As such, for the purposes of this question, only physical currency in the form of bills and coins is considered.