The Components of the U

question 83

Multiple Choice

The components of the U.S.M1 money supply are demand and checkable deposits plus

• A) currency.
• B) currency plus savings deposits.
• C) currency plus travelers checks.
• D) currency plus travelers checks plus money market deposits.

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Definitions:

Checkable Deposits

Bank account balances that are readily available for withdrawal and can be used for making payments, such as in checking accounts.

U.S. Treasury Deposits

Funds held at the Federal Reserve that belong to the U.S. Treasury, often from revenues or borrowing, used for government spending.

Certificates of Deposit

Savings certificates with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements.

Required Reserve Ratio

The fraction of deposits that regulators require a bank to hold in reserves and not lend out.