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Checkable deposits are counted in M1 because they can easily be used as a:
AUnit of tax law
BSource of loans
CMedium of exchange
DStore of taxes
Answer & Solution
Correct answer: C. Medium of exchange
1. What lands a deposit in M1 is how spendable it is.
2. The definition of M1 includes checkable, or demand, deposits.
3. One can easily use those deposits as a medium of exchange.
4. They are used that way to buy goods and services.
_Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 13 'Money and Banking'_
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