Final answer:
The correct example of near money is C) 30-day Treasury bill, as it is easily convertible into cash and often included in M2. A line of credit is neither M1 nor M2, while traveler's checks, physical currency, and checking account balances are part of M1. Money in a money market account belongs to M2.
Step-by-step explanation:
Regarding the example of near money, the correct answer is C) 30-day Treasury bill. Near money refers to assets that can be easily converted into cash but are not cash itself. A 30-day Treasury bill is a short-term government security that is easily convertible into cash and often included in measures of money supply such as M2.
Here is a breakdown of which category the listed items belong to in terms of money supply classifications M1 and M2:
- a. Your $5,000 line of credit on your Bank of America card - Neither M1 nor M2 because it's a form of credit, not a deposit.
- b. $50 dollars' worth of traveler's checks you have not used yet - M1, as traveler's checks are part of the currency component that is readily usable for transactions.
- c. $1 in quarters in your pocket - M1, since it is actual currency.
- d. $1200 in your checking account - M1, because it represents demand deposits which are included in M1.
- e. $2000 you have in a money market account - M2, as money market accounts are not directly used for transactions and represent near-monies that are part of M2.