Question:
Which of the following is not included in M2 definition of money supply?
(1) Currency held by the public
(2) Demand deposits held by the public
(3) Savings deposits held by the public
(4) Time deposits held by the public
(5) Credit cards held by the public
Correct Answer:
(5)
Answer Explanation:
M2 (broad money) includes currency held by the public, demand deposits (which together make M1), plus savings and time deposits. Credit cards are a method of deferring payment (creating a short-term liability), not an asset that constitutes part of the money supply.
Topic: Money and Banking Year: 2022
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