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Chapter 27: Q.10 (page 662)

What components of money do we count as part of M1?

Short Answer

Expert verified

Cash and coin circulation, account checking, and many more we count as part of M1.

Step by step solution

01

Concept on M1.

The M1 phrase is commonly used to describe money, which encompasses cash and coin circulation, account checking, and so on. It's a highly liquid investment.

02

Explanation of solution.

The demand deposit, also known as a checkable deposit, is very near to the currency. They are the funds maintained in checking accounts. The demand deposit is maintained by banks because the depositor of money can demand their deposited amount at any moment via check or debit card, and the bank must comply. The M1is made up of these checking accounts and currencies. The traveller's check is likewise included in M1, but its use has decreased over time.

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