Question

The narrowest definition of the money supply includes:
Answer choices :
a. stocks and bonds.
b. currency in circulation, checkable bank deposits, and traveler's checks.
c. mortgages and insurance policies.
d. currency in bank vaults.

Answer 1

Answer:

The narrowest definition of the money supply includes b. currency in circulation, checkable bank deposits, and traveler's checks.

Explanation:

The money supply -or money stock- can be defined, in the simplest way, as the entire stock of currency and other liquid instruments available in an economy at a given time. Therefore, the money supply includes coins and cash, as well as other "liquid instruments" or money substitutes like bank deposits and travaler's checks.