ECONOMICS (CBSE/UGC NET)

ECONOMICS

MONEY

Please wait while the activity loads.
If this activity does not load, try refreshing your browser. Also, this page requires javascript. Please visit using a browser with javascript enabled.

If loading fails, click here to try again

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Kanye has $12, 000 in cash and he deposits it in Kardashian National Bank. How much does M1 change?

A	$12, 000 x the monetary multiplier
B	$12, 000
C	it doesn’t change, cash and checks are both M1
D	$12, 000 less the required reserves

Explanation:

Detailed explanation-1: -M1 = coins and currency in circulation + checkable (demand) deposit + traveler’s checks. M2 = M1 + savings deposits + money market funds + certificates of deposit + other time deposits.

Detailed explanation-2: -Paper money is the most significant component of a nation’s money supply. M1 also includes traveler’s checks (of non-bank issuers), demand deposits, and other checkable deposits (OCDs), including NOW accounts at depository institutions and credit union share draft accounts.

Detailed explanation-3: -M1 is the most liquid and makes transactions the easiest, while M4 is the least liquid. The most commonly used indicator of the money supply is M3. It is also known as the total amount of financial resources.

There is 1 question to complete.