Final answer:
The classification of the items listed according to the money supply distinctions includes traveler's checks and cash as part of M1, and money in a money market account as part of M2. A credit line is neither because it's credit, not actual money.
Step-by-step explanation:
The question involves understanding the different categories of money supply, which are often classified as M1 and M2. Here are the classifications for the items listed:
a. Your $5,000 line of credit on your Bank of America card - Neither, as this is a form of credit, not actual money in circulation.
- b. $50 dollars' worth of traveler's checks you have not used yet - This is part of M1 because traveler's checks are considered to be part of the money supply that is available for immediate spending.
- c. $1 in quarters in your pocket - This is also part of M1 as it is currency in circulation.
- d. $1200 in your checking account - This forms part of M1 as well since checking accounts are very liquid and hence part of the money supply.
- e. $2000 you have in a money market account - This would be classified under M2. M2 includes all of M1 (which is all the cash and other liquid instruments) plus savings accounts, small time deposits, and non-institutional money market funds, which have fewer restrictions and are still fairly accessible but not as liquid as those in M1.
Understanding these concepts is essential for grasping the broader aspects of financial systems and transactions within an economy.