Final answer:
The simplified acquisition methods are for purchases not exceeding $10,000. M1 includes cash and checking account balances, while M2 includes M1 plus savings deposits, traveler's checks, and money market funds. A line of credit is neither M1 nor M2.
Step-by-step explanation:
Simplified Acquisition Methods and Monetary Supply Categories
The simplified acquisition methods should be used for all purchases of supplies or services not exceeding $10,000. This procurement method is designed to reduce administrative costs, improve opportunities for small business participation, and promote efficiency and effectiveness in purchasing.
Regarding the monetary supply categories, items in list a) through e) can be categorized as follows:
- M1 includes currency and liquid assets, such as cash in hand and the balances in checking accounts. Hence, c) $1 in quarters in your pocket and d) $1200 in your checking account are part of M1.
- M2 includes all of M1 plus savings deposits, small denomination time deposits, and noninstitutional money market funds. Therefore, b) $50 dollars' worth of traveler's checks and e) $2000 you have in a money market account can be categorized as part of M2.
- A line of credit as mentioned in a) does not fall under M1 or M2; credit lines are considered borrowing capacity, but not an actual monetary asset.
It is important to recognize the differentiation between M1, M2, and other financial instruments to understand monetary policy implications and personal finance management.