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3 March, 18:26

The narrowest definition of the money supply (M1) includes:

a. cash and travelers' checks.

b. cash, travelers' checks, and savings account balances.

c. cash, checking account balances, and travelers' checks.

d. cash, bank deposits, and money market accounts.

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  1. 3 March, 21:21
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    c. cash, checking account balances, and travelers' checks.

    Explanation:

    Money Supply is the concept that means the amount of the liquid financial products and total currency in the market or economy. It is regulated the macro-economically by the monetary policy. So, there are types of measures of money supply or stock:

    -M0: narrowly, it means the hard currency in circulation

    -MB: it equals M0 + the hard currency which are not technically in circulation and in bank reserves.

    -M1: it is the most common one and equals M0 plus checking accounts plus travelers' checks and other checkable deposits.

    -M2: covers M1 and saving accounts and CDs.

    -M3: it surrounds the larger deposits.

    -MZM: finally, this indicates the money market deposits.

    That's why we could notice that M1 narrowly means the cash, checking account and travelers' checks.
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