Which of the following is NOT true of the U.S. money supply? A) The F

QUESTION

Which of the following is NOT true of the U.S. money supply?

A) The Federal Reserve System makes it available.
B) Its most common measurement is referred to as M2.
C) It includes currency, traveler’s checks, and various bank checking account balances.
D) Cash or currency makes up roughly 80 percent of it.
E) Its narrowest measurement is referred to as M1.

ANSWER

Answer: D
Explanation: D) Cash, or currency, represents only about 37 percent of all media of exchange in the United States. The U.S. money supply is defined as the amount of money the Federal Reserve System makes available for people to buy goods and services. The money supply is customarily referred to in two ways: M1 or M2. M1 counts currency, traveler’s checks, and bank checking accounts. M2 includes all of M1 and also funds that take more time to access.