M1 and M2 Q&A
M1 - (correct answer)currency in circulation
travelers checks
demand deposits
other checkable deposits
M2 - (correct answer)M1
money market mutual funds
savings deposits
small denomination time deposits
small denomination time deposits - (correct answer)certificates of deposit with a
denomination of less than 100k
in order to be a medium of exchange... - (correct answer)must be widely accepted,
easily divisible, easily standardized, not deteriorate quickly, easy to carry
commodity money - (correct answer)made of precious metals or another valuable
commodity, very heavy and hard to transport
fiat money - (correct answer)paper currency decreed by government as legal tender but
not convertible into coins or precious metal, only can be accepted as a medium of
exchange if there is trust in the authority who issues it and if counterfeiting is hard
check - (correct answer)instruction from you to your bank to transfer money from your
account to someone else's account when she deposits the check
electronic payment - (correct answer)pay bills online
M1 - (correct answer)currency in circulation
travelers checks
demand deposits
other checkable deposits
M2 - (correct answer)M1
money market mutual funds
savings deposits
small denomination time deposits
small denomination time deposits - (correct answer)certificates of deposit with a
denomination of less than 100k
in order to be a medium of exchange... - (correct answer)must be widely accepted,
easily divisible, easily standardized, not deteriorate quickly, easy to carry
commodity money - (correct answer)made of precious metals or another valuable
commodity, very heavy and hard to transport
fiat money - (correct answer)paper currency decreed by government as legal tender but
not convertible into coins or precious metal, only can be accepted as a medium of
exchange if there is trust in the authority who issues it and if counterfeiting is hard
check - (correct answer)instruction from you to your bank to transfer money from your
account to someone else's account when she deposits the check
electronic payment - (correct answer)pay bills online
