Checking Account Deposits Are Counted as Part of the M1

question 81

Multiple Choice

Checking account deposits are counted as part of the M1 money supply because

• A) they earn interest income for the depositor.
• B) they are widely used as a means of making payment.
• C) banks hold currency equal to the value of their outstanding checking account deposits.
• D) they are ultimately the obligations of the Treasury.

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Definitions:

Demand for Paper Products

The total quantity of paper goods consumers are willing and able to purchase at various prices.

Elasticity

A measure of how much the quantity demanded or supplied of a good or service changes in response to a change in its price.

Price of a Resource

The monetary value assigned to a raw material, energy, or other fundamental inputs used in the production of goods and services.

Substitute Inputs

Alternatives that can be used in the production process if the original inputs become too expensive or unavailable.