Which of the following is NOT a component of M1?

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Multiple Choice

Which of the following is NOT a component of M1?

Explanation:
M1 is the money measure of the most liquid forms of money—the cash and assets you can use for transactions right away. It includes currency in circulation, checkable deposits (like checking accounts you can write checks from or use for debit), and traveler's checks. These are all highly liquid and readily spendable. Savings deposits, by contrast, are not included in M1 because they’re meant for saving rather than immediate spending. They’re part of M2, which adds slightly less liquid assets like savings accounts and small time deposits. So the item that is NOT a component of M1 is savings deposits.

M1 is the money measure of the most liquid forms of money—the cash and assets you can use for transactions right away. It includes currency in circulation, checkable deposits (like checking accounts you can write checks from or use for debit), and traveler's checks. These are all highly liquid and readily spendable.

Savings deposits, by contrast, are not included in M1 because they’re meant for saving rather than immediate spending. They’re part of M2, which adds slightly less liquid assets like savings accounts and small time deposits. So the item that is NOT a component of M1 is savings deposits.

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