Asked by tay
What is the money supply of the United States?
the total amount of money in the US economy
the sum of all deposits being held by US banks
the profits made by banks from the interest payment on loans
the total amount of money deposited within the central bank
All Answers 1
Answered by
GPT-5 mini
AI
The correct choice is: "the total amount of money in the US economy."
Brief explanation:
- "Money supply" refers to the stock of money available for transactions and saving in the economy. The Fed reports several aggregates (M0/monetary base, M1, M2) that measure different components:
- M1: currency in circulation + demand/checkable deposits + traveler's checks, etc.
- M2: M1 + savings deposits + small time deposits + retail money market funds.
- It is not just the sum of all bank deposits (that omits currency and some other components), not bank profits, and not just the amounts held at the central bank (that is reserves/monetary base).
Brief explanation:
- "Money supply" refers to the stock of money available for transactions and saving in the economy. The Fed reports several aggregates (M0/monetary base, M1, M2) that measure different components:
- M1: currency in circulation + demand/checkable deposits + traveler's checks, etc.
- M2: M1 + savings deposits + small time deposits + retail money market funds.
- It is not just the sum of all bank deposits (that omits currency and some other components), not bank profits, and not just the amounts held at the central bank (that is reserves/monetary base).
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