Question

Currency and checkable deposits are:

A. Assets of the Federal Reserve Banks or of financial institutions
B. Redeemable for gold and silver from the Federal Reserve System
C. Of intrinsic value which determines the relative worth of money
D. The major components of money supply M1

Answer 1

Currency and checkable deposits are the primary components of the M1 money supply, which includes highly liquid financial assets that are measurable by the Federal Reserve System on a daily basis.

Step-by-step explanation:

Components of Money Supply M1

Currency and checkable deposits are the major components of money supply M1. The M1 money supply includes coins and currency in circulation—the coins and bills that are not held by the U.S. Treasury, at the Federal Reserve Bank, or in bank vaults. Additionally, M1 includes checkable deposits, also known as demand deposits, which are held in checking accounts. These deposits are accessible 'on demand' by the account holder through checks or debit card usage. Together, these items constitute the liquid assets that form M1, which is a key economic indicator measured daily by the Federal Reserve System.