Final answer:
The M1 money supply includes currency, checking accounts, and traveler's checks. Money market deposit accounts, small-denomination time deposits, and shares in retail money market mutual funds are all part of M2 and are not included in M1. American Express cards are not a part of the M1 or M2 money supply as they represent credit rather than liquid money.
Step-by-step explanation:
The question asks which items are included in the M1 money supply. M1 includes all liquid monies such as currency, money in checking accounts (demand deposits), and traveler's checks. It does not include less liquid forms of money such as savings accounts, time deposits, or shares in money market mutual funds.
Therefore, of the list provided:
- Money market deposit accounts are part of M2, not M1.
- American Express cards represent a line of credit, not actual money, so they are not included in M1 or M2.
- Small-denomination time deposits (less than $100,000) are part of M2 as they are less liquid than M1 components.
- Shares in retail money market mutual funds are also a component of M2, not M1.
M1 is a classification of the money supply that represents the most liquid forms of monetary assets, meaning they can be quickly and easily converted to currency without loss of value.