In defining the money supply (M1), economists exclude savings deposits on the grounds that: a) savings deposits are a form of investment and thus a better store of value than money. b) savings deposits are liabilities of commercial banks, whereas checkable deposits are assets of the banks. c) the purchasing power of savings deposits is much less stable than that of checkable deposits and currency. d) savings deposits are not generally used as a means of payment.


Yup D isthe correct one. Rationale: M1 focuses on the function of money as a medium of exchange and therefore includes only assets that are directly used that way (i.e., currency in circulation, demand deposits, other checkable deposits or depository institutions and travelers’ checks).



Sorry but what a demand deposit?