ECONOMICS (CBSE/UGC NET)

ECONOMICS

MONEY

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

Which of the following is used to describe money that is in your pocket, your checking account, and your piggy bank?

A	specie money
B	fiat money
C	M1
D	M2

Explanation:

Detailed explanation-1: -Money is measured with several definitions: M1 includes currency and money in checking accounts (demand deposits). Traveler’s checks are also a component of M1, but are declining in use. M2 includes all of M1, plus savings deposits, time deposits like certificates of deposit, and money market funds.

Detailed explanation-2: -M1 money is a country’s basic money supply that’s used as a medium of exchange. M1 includes demand deposits and checking accounts, which are the most commonly used exchange mediums through the use of debit cards and ATMs.

Detailed explanation-3: -M1 includes those assets that are the most liquid such as cash, checkable (demand) deposits, and traveler’s checks. M2 includes M1 plus some less liquid (but still fairly liquid) assets, including savings and time deposits, certificates of deposit, and money market funds.

There is 1 question to complete.