Which of the following is not included in M2 measure of the money supply?Multiple ChoiceCash in the vault of a commercial bank.Checking account in a credit unionChecking account balances at mutual savings banks.Currency in circulation outside of commercial banks.

M1 and M2 are two measures of the money supply. The money supply is the total amount of money in…

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Which of the following is not included in M2 measure of the money supply?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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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.

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Which of the following is not included in M2 measure of the money supply?
Multiple Choice
Cash in the vault of a commercial bank.
Checking account in a credit union
Checking account balances at mutual savings banks.
Currency in circulation outside of commercial banks.

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