In the textbook example with no currency in circulation, money supply M1 equals:
Atotal bank deposits
Bthe bank's net worth
Ctotal bank loans
Dtotal bank reserves
Answer & Solution
Correct answer: A. total bank deposits
With zero currency, M1 = currency + deposits = 0 + deposits, so M1 equals total bank deposits.
Related questions
The total stock of money in circulation among the public at a point of time is called:Acting as the 'lender of the last resort' to commercial banks is a function performed by tIn a barter economy, exchange requires that each party wants exactly what the other offersCommercial banks are able to create credit primarily on the basis of their:The currency held by the public plus the reserves of commercial banks together form the:Deposits that can be withdrawn on demand, such as in a current or savings account, are calThe rate at which the central bank lends short-term funds to commercial banks is the:The minimum percentage of deposits that commercial banks must keep with the central bank i