Answer to Question #107990 in Macroeconomics for Sarai

Question

Currency held outside banks is $400 billion, DD are $350 billion, traveler's checks (TC) are $2 billion, and money market mutual funds (retail) are $100 billion. What does M1 equal?

Answer 1

The money that can be used in everyday transactions is M1 money supply.

Coins and bills (paper money) minted by U.S.A Treasury is called as Currency. The deposits on which checks can be written is known as the Checkable Deposits.

The following category fall into the M1 supply of money category:

1. The currency held outside the bank

2. The checkable deposits

3. The traveler’s check

We have the following category of money:

1. Currency held outside the ban is $400 million.

2. Checkable deposits are $350 billion.

3. Traveler’s checks are $2 billion.

4. Money market mutual funds (retail) are $100 billion.

From, this category of money, M1 includes the following:

1. Currency held outside the ban is $400 million.

2. Checkable deposits are $350 billion.

3. Traveler’s checks are $2 billion.