Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 31 - Money, Banking, and Financial Institutions - Questions - Page 653: 2

Answer

Commercial banks and thrift institutions offer checkable deposits within the M1 money supply. Currency held in the banks is not included in the M1 or M2 money supply.

Work Step by Step

Checkable deposits have high liquidity to the point where they can be included in the M1 money supply. Currency held in banks is not considered "near money" or money that can easily be converted into a usable medium of exchange.
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