Which of the following elements of the money supply, as defined by the Federal Reserve, can be spent immediately?
Understand the Problem
The question is asking which specific elements of the money supply, as defined by the Federal Reserve, can be accessed and spent immediately. It presents multiple choice options that likely categorize different types of money supply.
Answer
M1
The element of the money supply defined by the Federal Reserve that can be spent immediately is M1.
Answer for screen readers
The element of the money supply defined by the Federal Reserve that can be spent immediately is M1.
More Information
M1 is considered the most liquid form of money because it is directly spendable, consisting of cash and checking accounts.
Tips
A common mistake is confusing M1 and M2; remember that M1 is the most liquid and readily available for spending.
Sources
- M1 Money Supply: How It Works and How to Calculate It - Investopedia - investopedia.com
- Measuring Money: Currency, M1, and M2 - OpenEd CUNY - opened.cuny.edu
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