Final answer:
Cash includes money that is immediately available for transactions, which covers currency, coins, and checks, all part of M1 money supply. It does not include notes receivable due to their lack of immediate liquidity. Traveler's checks are also considered cash, though less commonly used today.
Step-by-step explanation:
In terms of business and economics, the term cash includes items that can be used for transactions immediately and are highly liquid. Therefore, cash includes coins, currency (paper money), and checks, which are all part of the M1 money supply. The M1 money supply incorporates coins and currency in circulation not held by the U.S. Treasury, Federal Reserve Bank, or in bank vaults, in addition to checkable deposits or demand deposits held in checking accounts. Traveler's checks also fall under M1, although their use has declined over time. However, cash does not include notes receivable as they are not available for immediate transactional use; instead, they are a form of credit that needs to be paid back in the future.
When we say money outside of banks, such as money in your wallet or in couch cushions, we refer to currency in circulation. But the money in your bank account, while part of M1, is not immediately in circulation until you withdraw it. Liquidity is key to understanding what qualifies as cash, as it refers to how quickly you can use a financial asset to buy a good or service.