27.2

Which of the following components are used to calculate M2? Select all that apply.

All of the above

True or false? A demand deposit is an investment option in which the deposits of many investors are pooled together and invested in a safe way.

False

M1 is calculated by adding together time deposits, savings deposits, and M2 money supply.

False M1 = coins and currency in circulation + checkable (demand) deposit + traveler's checks. M2 = M1 + savings deposits + money market funds + certificates of deposit + other time deposits.

Which of the following is part of M1? I. currency in a bank's vault II. cash in your wallet III. checkable deposits IV. traveler's checks

II, III, and IV

_____ is a measure of how quickly a financial asset can be used.

Liquidity

Which description best fits the definition of M2 money supply?

M2 money supply is the money supply that includes currency, checking accounts in banks, traveler's checks, savings deposits, money market funds, and certificates of deposit.

M1 is calculated by adding together currency in circulation, checkable deposits, and traveler's checks.

True

Examples of smart cards include _________

calling cards gift cards

A purchase using a _______ is considered a short term loan from the lender to you.

credit card

The _________ of an investment is determined by how easy it is to sell an asset at any given time.

liquidity

Which of the following is an investment option in which the deposits of many investors are pooled together and invested in a safe way?

money market fund

You can store a certain amount of money on a _______ which can be used to make specific purchases at specific places.

smart card