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In the money supply, currency means what exactly?
AMoney kept in checking accounts at a bank
BCash held in the form of coins and paper money
CDeposits that pay interest over a fixed period
DCredit balances available on a payment card
Answer & Solution
Correct answer: B. Cash held in the form of coins and paper money
1. Currency is cash held in the form of coins and paper money.
2. Travellers cheques, cashier cheques and money orders are counted as other forms of currency.
3. Balances in checking accounts are demand deposits, which sit beside currency rather than inside it.
4. A card balance is borrowing capacity, so it is neither currency nor any other part of the money supply.
_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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