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The money supply is made up of which three components?
ACurrency, demand deposits, and time deposits
BCurrency, credit cards, and government bonds
CCoins, bank loans, and certificates of deposit
DCurrency, savings bonds, and insurance premiums
Answer & Solution
Correct answer: A. Currency, demand deposits, and time deposits
1. The money supply is composed of currency, demand deposits and time deposits.
2. Currency is the cash, demand deposits are the chequable balances, and time deposits are the interest paying balances locked for a period.
3. Credit cards are excluded because they are a form of borrowing rather than money.
4. Bank loans and bonds are assets and claims built on top of money, not components of the supply itself.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 15 "Understanding Money and Financial Institutions", section 15.1 Show Me the Money_
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