How Does Currency Contribute to the Money Supply

question 103

Multiple Choice

How does currency contribute to the money supply?

• A) Currency held by the public and by banks is part of the money supply.
• B) Currency held by the public is part of the money supply, but currency held by banks is not.
• C) Currency held by the public is not part of the money supply, but currency held by banks is.
• D) Currency held by the public or banks is not part of the money supply since it is not included in M1.

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Definitions:

Liability

Legal responsibility for one's actions or omissions, which can result in an obligation to compensate for any resulting damages or losses.

Debt

an obligation, typically financial, owed by one party to another.

Retires

The act of leaving one's job and ceasing to work, typically due to reaching a certain age or for health reasons.

Liability on Debts

The legal responsibility to pay money owed to creditors, either by an individual or a company.