Question

If you lose your wallet along with your ATM card, your liability is

A) Unlimited
B) Limited to $50
C) Covered by the bank
D) Non-existent

Answer 1

The items in the list can be categorized into M1, M2, or neither. Your line of credit is neither M1 nor M2. Traveler's checks and quarters are part of the M1 money supply. Checking account balances and money market accounts are part of the M1 and M2 money supply, respectively.

Step-by-step explanation:

For the following list of items, indicate if they are in M1, M2, or neither:

1. a. Your $5,000 line of credit on your Bank of America card: Neither. Your line of credit is not a type of money supply.
2. b. $50 dollars' worth of traveler's checks you have not used yet: M1. Traveler's checks are considered part of the M1 money supply because they are a form of money that can be used as a medium of exchange.
3. c. $1 in quarters in your pocket: M1. Quarters are considered part of the M1 money supply because they are a form of currency that can be used as a medium of exchange.
4. d. $1200 in your checking account: M1 and M2. Checking account balances are part of both the M1 and M2 money supply because they are easily accessible and can be used as a medium of exchange.
5. e. $2000 you have in a money market account: M2. Money market accounts are considered part of the M2 money supply because they are less accessible than checking accounts, but can still be readily converted into cash.