Final answer:
Charlie's checking account deposit at the Bank of America qualifies as money and is classified as M1 due to its liquidity and readiness for transactions. Other forms like credit cards, debit cards, and Bitcoin are not money themselves, but means to access or represent money.
Step-by-step explanation:
To identify which of the provided items can be classified as money, it's essential to understand the concepts of M1 and M2 money supply. M1 includes the most liquid forms of money, such as physical currency and demand deposits like checking accounts. M2 is a broader category that includes M1 plus other forms of money that are less liquid, like savings accounts and money market accounts.
- a. Your $5,000 line of credit on your Bank of America card falls into neither M1 nor M2 because it represents potential borrowing, not actual money.
- b. $50 dollars' worth of traveler's checks you have not used yet are included in M1 as they are accepted as a medium of exchange and can be easily converted to cash.
- c. $1 in quarters in your pocket is considered part of M1 because it's physical currency.
- d. $1200 in your checking account is part of M1 because it's a demand deposit and readily available for transactions.
- e. $2000 you have in a money market account is part of M2 since it is less liquid than the components of M1 but can still be converted into cash relatively quickly.
In this context, items like credit cards and debit cards are not considered money but rather tools to access money in accounts; the same applies to Bitcoin. Therefore, Charlie's checking account deposit at the Bank of America is considered money (M1).