Unformatted text preview: there are several ways of referring to the money supply: M-1 and M-2. M1is the most liquid definition of the money supply: they are directly and immediately usable as a medium of exchange. M1 includes currency (coins and paper money) held by the public (what we have in our purses, wallets, and homes), and checkable deposit (what we have in our checking account). On the other hand, M2 is a little less liquid than M1. M2 includes: M1, Savings deposits and money market deposit account, certificates of deposit (time accounts) less than $100,000, and money market mutual fund balances, which can be redeemed by phone calls, checks, or through the Internet. I also have learned that money supply needs to be controlled because it is important to have an organization that controls the money supply to try to keep the U.S. economy from growing too fast or too slow....
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This document was uploaded on 11/02/2011 for the course BUSINESS BA 101 at Montgomery.
- Winter '10