Multiple Choice QuestionIf currency is $40m, demand deposits total $120m, notice deposits and personal term deposits are $300 and certificates of deposits are $250m, what is M1?Multiple choice question.$710$40m$460$160m
Question
Multiple Choice QuestionIf currency is 120m, notice deposits and personal term deposits are 250m, what is M1?Multiple choice question.40m160m
Solution
M1 is a measure of the money supply that includes physical currency and coin, demand deposits, traveler's checks, and other checkable deposits.
In this case, the currency is 120m. Notice deposits, personal term deposits, and certificates of deposits are not included in M1.
So, to calculate M1, we add the currency and demand deposits:
120m (demand deposits) = $160m
Therefore, M1 is $160m.
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