Scenario Currency. $1000 Checking Account balance. $2000 Savings Account Balance

Question

Scenario Currency. $1000 Checking Account balance. $2000 Savings Account Balance. $5000 Small Denomination Time Deposits. $6000 Non Institutional Money Market Fund Shares. $7000
M1 in this economy equals A. $1000 B. $2000 C. $3000 D. $8000 Scenario Currency. $1000 Checking Account balance. $2000 Savings Account Balance. $5000 Small Denomination Time Deposits. $6000 Non Institutional Money Market Fund Shares. $7000
M1 in this economy equals A. $1000 B. $2000 C. $3000 D. $8000 Currency. $1000 Checking Account balance. $2000 Savings Account Balance. $5000 Small Denomination Time Deposits. $6000 Non Institutional Money Market Fund Shares. $7000
M1 in this economy equals A. $1000 B. $2000 C. $3000 D. $8000

Explanation / Answer

A measure of the money supply that includes all physical money, such as coins and currency, as well as demand deposits, checking accounts and Negotiable Order of Withdrawal accounts. M1 measures the most liquid components of the money supply, as it contains cash and assets that can quickly be converted to currency. It does not contain "near money" or "near, near money

here in this problem M1=$3000 which include $1000 currency + $2000 checking account balance

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