What is the major component of the money supply M1?OCertificates of depositO Savings depositsO Checkable depositsGold certificates

Money supply M1 consists of currency in circulation, demand deposits (both current and saving…

Answered: What is the major component of the…

What is the major component of the money supply M1? Certificates of deposit Savings deposits Checkable deposits Gold certificates

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

What is the major component of the money supply M1?
OCertificates of deposit
O Savings deposits
O Checkable deposits
Gold certificates

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