Answer to Question #182406 in Macroeconomics for Olivia Sullivan

Question

For each of the following assets, answer if it is considered:

• M1 money
• M2 money
• Neither M1 or M2 (it is not currency)

1. $0.27 cents that has accumulated under a couch cushion.
2. Your $2,000 line of credit with your Visa account. 
3. The $210 balance in your checking account. 
4. $800 in a 12-month CD (certificate of deposit)
5. 10 shares of stock your uncle gave you on your 18th birthday, which are now worth $520. 
6. $200 in traveler’s checks you have purchased for your spring‐break trip. 

Answer 1

1. $0.27 cents that has accumulated under a couch cushion. Considered in both M1 and M2 money.
2. Your $2,000 line of credit with your Visa account. Neither M1 or M2 (not a currency).
3. The $210 balance in your checking account. Considered both in M1 and M2 money.
4. $800 in a 12-month CD (certificate of deposit). Considered as M2 money.
5. 10 shares of stock your uncle gave you on your 18th birthday, which are now worth $520. Neither M1 or M2 (not a currency).
6. $200 in traveler’s checks you have purchased for your spring‐break trip. considered in both M1 and M2 money.