Why Are Funds in a Savings Account NOT Considered Part

question 95

Multiple Choice

Why are funds in a savings account NOT considered part of the M1 money supply?

• A) The funds do not provide a store of value.
• B) The funds are not measured in a standardized unit of measure.
• C) The funds are too liquid.
• D) The funds are not spendable as a medium of exchange.

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Definitions:

Unbiased Forward Rates

Forward exchange rates that are equal to the future spot rates, as predicted by economic theory, free from any speculation or bias.

Spot Exchange Rate

The current market price for exchanging one currency for another for immediate delivery.

Forward Exchange Rate

An agreed exchange rate for a currency to be exchanged at a future date, used in hedging and trading strategies.

Inflation Rates

The rate at which the cost of general goods and services inflates, consequently eroding the power to buy.